China'S Fiscal Deficit Has Increased To 4%, Which Is Significant.

Sheng Songcheng, director of the central bank's investigation and Statistics Division, wrote in his personal name recently that the deficit rate of our country can be raised to 4% or even higher in the coming period, which can make up for the reduction in tax revenue brought about by tax reduction, effectively carry out counter cyclical regulation and control, better support the supply side reform, and will not bring a higher level to our government.

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In 2015, China's fiscal deficit rate was 2.3%, lower than the 3% standard proposed by the Maastricht treaty.

He believes that there is no definite unification of the deficit rate.

It should be considered comprehensively according to the country's debt balance and structure, economic development and interest rate level. The warning line of Ma about 3% is not in line with China's actual situation.

According to different interest rates, GDP growth and deficit rate, Sheng song has calculated the debt ratio of our government.

One scenario is that assuming that the government debt ratio is 39% at the end of 2015, the local currency debt interest rate will be 4% every year for the next 10 years, and the GDP growth rate will remain unchanged at 6%. How will the government debt rate change at the end of 2025 at different deficit rates?

The result shows that even if the deficit rate reaches 4%, the government debt ratio of our country in 10 years will be only 68.9%, which is lower than most countries.

This shows that there is still much room for China to implement proactive fiscal policy, so called 3%.

It is not in line with the actual situation of our country.

Therefore, Sheng Songcheng pointed out that in the coming period, the deficit rate of our country will be expanded to 4%, and the debt ratio of our government will still be controlled within 70% at the end of 2025, which will not bring higher debt risk to our government.

To analyze the sustainability of China's government debt, we should adopt the combination of debt balance and annual debt increment.

The deficit rate only reflects the ratio of debt increment to GDP each year, and the index of debt balance, interest rate and debt paying ability is even more meaningful than deficit rate.

At present, China's government debt is relatively low, its short-term debt is relatively small, its foreign debt ratio is very low, the economy has maintained a relatively fast growth, the government revenue has continued to increase, the bond market has gradually improved, the issuance of local bonds has been standardized, the cost of financing has been decreasing, the assets of state-owned enterprises are strong, and the financing platform has made some profits, all these have enhanced our government's debt capacity.