ompared with traditional expansionary policies that expand demand directly based on government cash injections, China's current active fiscal policy will focus on boosting the market's vitality and effectively allocating resources, said economist Liu Shangxi, head of the Chinese Academy of Fiscal Sciences, cited in a report by State-owned news portal the People’s Daily
The current fiscal policy will inject more certainties into the economy, Liu said. It will focus on the real economy and set up subsidies to support employment, and there will be an expansion of preferential policies for small-and medium-sized enterprises (SMEs). These measures will help erase unpredictable factors and stabilize consumption and employment.
Yet, Liu warned that fiscal policy should be solid as well, which means there are contingency plans and bottom lines in policymakers' minds, instead of making frequent changes and adjustments to policies. The proactive fiscal policy should be targeted, meaning that preferential policies should be offered in accordance with the different conditions of SMEs, rather than taking a cookie-cutter approach to provide funding or policy support.