3. Main Policy Directions

To achieve the above-mentioned objectives, it is imperative that we make an adequate assessment of the shocks and impact of covid-19 on the global economy, adopt a targeted approach in intensifying macro policy regulation and implementation, strengthen coordination and mutual support between macro policies, and work to keep economic growth stable and guarantee living standards, with a view to preventing short-run shocks from turning into long-term trends.

We will pursue a more proactive and impactful fiscal policy. The 2020 deficit-to-GDP ratio is projected at more than 3.6%, with the deficit increased by 1 trillion yuan over last year; the central government will issue 1 trillion yuan of covid-19 bonds this year, which will not be included in the deficit. All these newly increased funds will be transferred in full to local governments to be predominantly used to ensure job security, basic living standards, and the operations of market entities and to support efforts to cut taxes and fees, reduce rental and loan interests, spur consumption, and increase investment. We will make every effort to optimize the composition of government spending, firmly cut general expenditures, strictly prohibit construction of new government buildings and wasteful and excessive spending, and pledge to increase spending on ensuring people’s wellbeing, including funds for poverty alleviation, compulsory education, basic old-age insurance, basic medical insurance, and urban and rural subsistence allowances. Overall planning will be carried out to use funds carried over from previous years to support efforts to achieve moderate prosperity, overcome the impact of the epidemic on the economy, and carry out major projects in the 14th Five-Year Plan. We will increase transfer payments to local governments whose revenues have been badly affected by the epidemic in order to ensure basic living needs, the payment of salaries, and the normal government functioning.

We will pursue a prudent monetary policy in a more flexible and appropriate manner. We will guide considerably faster growth in the M2 money supply and aggregate financing in the economy than that achieved last year. We will use a combination of tools, such as open market operations, interest rate cuts, required reserve ratio reductions, re-lending, and rediscounts, to maintain reasonably sufficient liquidity and guide loan interest rates in continuing moving downward, in an effort to reduce the overall financing costs of businesses. We will continue the policy of allowing micro, small, and medium-sized enterprises to defer their loan repayments; this policy will be extended as far as possible to inclusive loans granted to micro and small businesses, while other businesses facing serious financial difficulties may also have their loan repayments postponed upon negotiation. New monetary policy tools will be created to directly serve the real economy, providing financing support in the case of emergencies. We will guide financial institutions in increasing the credit supply to micro, small, and medium-sized businesses, and encourage them to grant inclusive credit loans to micro and small businesses. We will work to keep the RMB exchange rate generally stable at an adaptive, balanced level, and maintain an appropriate scale of foreign exchange reserves. We will ensure financial stability, manage risks effectively, and forestall systemic risks.

We will ensure full, stronger implementation of our employment-first policy. Giving top priority to protecting job security, we will adjust policy intensity as the employment situation changes, so as to keep the workforce stable, improve the composition of employment, and increase its overall quality. We will increase support for businesses in keeping their payrolls stable, and provide tailored support and assistance for different areas, enterprises, and groups, so as to forestall and defuse risks of large-scale job losses. We will make better use of the role of business startups and innovation in creating jobs, and explore ways of using related support policies to encourage college graduates to engage in innovation and start businesses. We will guide the healthy development of flexible employment and new forms of employment. We will give stronger support to key groups such as college graduates, rural migrant workers, and demobilized military personnel, allow the time-limited practice of getting hired first with later completion of vocational qualifications, make good use of upskilling funds, provide more employment assistance for people who have difficulty finding work, especially those living in poverty, and eliminate the phenomenon of zero-employment families.

We will step up overall planning and coordination of macro policies. We will strengthen preparatory research on policy options, and promote greater coordination and synergy between fiscal, monetary, employment, consumption, investment, industrial, and regional policies. We will firmly implement the strategy of expanding domestic demand, fully tap the potential of our enormous market, give full play to the basic role of consumption and the key role of investment, guide investment toward areas that have benefits for both supply and demand sides and multiplier effects, and push for the steady expansion of domestic demand. To promote high-quality development of manufacturing, our industrial policies need to combine government guidance with market mechanisms, allow independent development and opening up and cooperation to mutually reinforce one another, and focus on upgrading industrial foundations and modernizing industrial chains. We will strengthen the fundamental position of competition policies, and create an institutional environment that encourages fair competition, thereby further boosting market dynamism. We will ensure that regional policies give full play to the comparative advantages of each region, use major projects and policies to lead the implementation of major regional development strategies, and work faster to foster new drivers for high-quality development nationwide.

III. Major Tasks for Economic and Social Development in 2020

In 2020, we will act on the decisions and plans of the CPC Central Committee and the State Council for coordinating epidemic containment with economic and social development, and focus our work on the following nine areas:

1. Consolidating and expanding initial progress in epidemic containment and ensuring regular prevention and control efforts In line with the overall strategy of preventing both the importation of cases and a possible domestic resurgence, we will implement targeted and effective measures in all aspects of epidemic containment in a timely, solid, and meticulous manner.

1) We will consolidate progress in prevention and control work throughout the country. We will improve the regular containment mechanism to ensure timely detection, rapid response, targeted management, and effective treatment. We will refine and launch relevant contingency plans in a timely manner and take science-based prevention measures to close loopholes. We will comprehensively consolidate community-based networks for epidemic control, while at the same time strengthening IT-based smart prevention and control capabilities. We will continue to do everything we can in treating suspected and confirmed patients, and provide psychological counseling for recovered patients, people under quarantine, and front-line medical workers. We will also step up vaccine research and development.

2) We will strengthen and improve measures to prevent imported cases. We will continue to increase support and care for overseas Chinese citizens. The line of epidemic defense will be held firmly in point-of-entry cities, and medical resources and health workers will be better allocated. We will support border areas in building public health facilities and enhancing their testing and quarantine capabilities, so that risk points and risk sources can be rapidly and accurately identified and controlled. We will improve services to ensure the safety of those quarantined at designated facilities, monitoring their health and providing necessary counseling.

3) We will promote international cooperation to combat covid-19. We will deepen exchanges and cooperation with the WHO, explore the establishment of a regional liaison mechanism for public health emergencies, continue to provide assistance within our capacity to relevant countries, advance the Healthy Silk Road initiative, and contribute to international cooperation on fighting covid-19 in multiple ways. We will ensure the quality of exported epidemic prevention supplies. We will also strengthen international cooperation on research and development in order to achieve breakthroughs in the development of effective covid-19 remedies and vaccines as early as possible.

2. Achieving progress in the three critical battles and ensuring that all tasks are accomplished on schedule. We will ensure that poverty alleviation is accomplished on schedule, the objectives for pollution prevention and control for the present stage are attained, and systemic financial risks are forestalled.

1) We will secure a decisive victory over poverty. By fully implementing the working mechanism whereby the central government is responsible for overall planning, provincial-level governments assume principal responsibility, and city and county governments are responsible for program implementation, we will continue to focus on poverty alleviation efforts in deeply impoverished areas such as the three regions and three prefectures, list all counties and villages which have not yet eliminated poverty in order to oversee their poverty-alleviation efforts, and ensure that rural residents living below the current poverty line are lifted out of poverty and the poor counties are removed from the poverty list. In alleviating poverty through boosting employment, we will give priority to helping impoverished workers return to their posts; ensure that poverty-reduction programs restart quickly; encourage enterprises to recruit employees from poor areas, particularly from the registered poor families; and support poverty-reduction workshops and leading enterprises in creating job opportunities for local people. We will further promote consumption as a means of poverty alleviation, ensure better linkage between production and sales, and address the difficulties some impoverished areas have in selling their agricultural products due to the epidemic. In reducing poverty through developing local industries, we will make good use of assistance funds and microfinance, allow local governments to make appropriate adjustments and improvements to poverty-alleviation funds this year, and increase rewards and subsidies for related programs. We will work quickly to reopen and press ahead with final-phase projects to relocate people from inhospitable areas and to ensure safe drinking water for poor rural populations, so that all of these projects are essentially completed in the first half of the year. We will set out detailed follow-up support measures for relocated families, and shore up weaknesses in education and medical care facilities in large resettlement areas. We will step up the development of public services infrastructure and promote education in poor areas, and consolidate and build on our achievements in reducing drop-out rates and ensuring attendance. We will continue to carry out renovation of dilapidated rural houses so as to complete the task of ensuring safe housing for every poor household. We will carry out work-relief programs in more sectors and more areas for greater numbers of impoverished people. We will provide assistance and support for those who have sunk back or fallen into poverty due to the epidemic outbreak and ensure that their basic living needs are covered. We will strengthen social security to better meet basic needs of those impoverished people who have no capacity to work and ensure that our social safety net covers all eligible residents. We will strengthen poverty alleviation efforts in targeted impoverished areas. We will support old revolutionary base areas in reducing poverty and promoting revitalization and development. Major support policies will remain in place for counties that have recently been lifted out of poverty. We will conduct research on establishing a long-term mechanism for addressing relative poverty.

2) We will continue to strengthen pollution prevention and control. By maintaining the same direction and intensity of effort, we will address problems at the source, bring about sustained improvement in the environment, and speed up the establishment of a modern environmental governance system. We will consolidate our successes in the campaigns to keep our skies blue, our waters clear, and our land pollution-free. We will work to establish long-term mechanisms for clean winter heating in northern China in an orderly manner; upgrade more steel enterprises so that they meet the ultra-low emissions target; control pollution caused by diesel trucks; build more special-purpose railway lines; and continue to bring about a shift in freight transportation from highways to railways. These measures will ensure that the 13th Five-Year Plan target for the percentage of days with good or excellent air quality in cities at and above prefecture level is achieved. We will take stronger steps to treat urban sewage, clean up black, malodorous water bodies in cities, improve the water environment in the Bohai Sea region through comprehensive measures, control pollution in agriculture and rural areas, protect water sources, and launch a number of major projects to protect the environment in the Yangtze River and Yellow River basins. We will make steady progress in soil pollution prevention and control, and work to ensure that cropland and other land plots that have been polluted are used safely. We will draw up a national plan for undertaking major projects to protect and restore important ecosystems, refine the river chief and lake chief systems, move quickly to implement the forest chief system, continue our holistic approach to the conservation of mountain, river, lake, forest, farmland, and grassland ecosystems, and work to comprehensively address groundwater over-abstraction. Water consumption per 10,000 yuan of GDP will drop by 1.2%. We will tighten oversight over ecological conservation, and work to improve the system of oversight standards for ecological red lines and supporting policies. We will improve mechanisms for ecological compensation, draft regulations regarding compensation for ecological conservation efforts, and carry out trials of comprehensive ecological compensation. We will also step up development of national ecological conservation pilot zones. We will proactively respond to global climate change, and speed up development of the national carbon market. We will develop green industries, publish the Green Technology Catalog, and support third-party participation in pollution control in industrial parks. We will step up efforts to shore up weaknesses in environmental infrastructure such as facilities for urban sewage and garbage treatment and for collection and disposal of medical waste and hazardous waste. We will promote waste sorting across the country, look into measures for controlling the pollution created by express delivery packaging and the problem of excessive packaging, and raise the percentage of urban household waste that is safely disposed of.

3) We will ensure that no systemic risks arise. We will keep a close eye on external uncertainties which might arise from the volatile global financial markets and commodity markets, and improve the mechanisms for early warning and response with regard to cross-border capital flow. We will follow and monitor the liquidity risk of industries and enterprises with high leverage ratios and decreased profit-making ability in order to prevent breaks in the funding chains coalescing into chain reactions. We will continue to manage the risks associated with high-risk financial institutions in an orderly manner. We will actively work to ensure the stability of the bond market, move quickly to refine market- and law-based mechanisms for handling bond defaults, and set up a risk prevention and control system that incorporates early detection, early warning, early discovery, and early handling of risks. We will ensure implementation of policies for cancelling the non-performing loans of banks and encourage market entities to participate in the handling of non-performing loans. We will refine the recovery and resolution mechanism for financial institutions and support banks in replenishing capital through multiple channels. We will steadily defuse hidden debt risks of local governments. In accordance with the principle that houses are for living in, not for speculation, we will move steadily to develop a sound, long-term mechanism to implement city-specific policies and promote steady and healthy development of real estate markets, while working hard to keep land prices, housing prices, and market expectations stable.