Research On China’s Financial Sustainability In New Era

With the convening of the 19th National Congress of the CPC,China officially entered the decisive stage of building a well-off society in an all-round way and the crucial period for socialism with Chinese characteristics to enter a new era.Nowadays,the Chinese economy has shifted from a period of rapid growth to a period of high-quality development and is in a period of transforming its mode of development,optimizing its economic structure and shifting its growth momentum.Because of this,China’s economic growth rate has been slower than that of the early twentieth century,and the contradiction between rigid fiscal spending and reduced fiscal revenue has continuously pushed the fiscal pressure on China.Since finance is the foundation of a country’s operation and an important link in maintaining its national economy and social development,whether or not finance is sustainable is an important factor in ensuring that the country can maintain its economic growth in the long term and provide public services and products to the public.Since the reform and opening up,China’s financial strength has been continuously enhanced.More and more people have enjoyed the public services and public goods provided by the government.However,with the continuous economic development,China’s financial administration also faces many problems.First of all,the increasingly serious population aging in China leads to a substantial increase in the expenditure on basic endowment insurance funds and the growing gap in the income and expenditure of pension funds.Secondly,since the 12th FYP,Minsheng Project has gradually become the financial expenditure of China,China’s growing spending on people’s livelihood such as education,social security,medical care and employment has put increasing pressure on China’s financial sustainability.The factors that affect fiscal sustainability are very complex.This paper examines the sustainability of China’s fiscal system during 1995-2017 and forecasts the changing trends of fiscal sustainability indicators such as future fiscal deficits.Then,combined with the scenario analysis,this paper puts forward some suggestions on how to deal with the pressure of financial sustainability in the new cycle of economic development,including adjusting the economic structure and industrial structure,optimizing the structure of fiscal expenditure,standardizing the fiscal and taxation system,improving the government debt management system,Budget management system as well as accelerate the reform of investment and financing system and state-owned enterprise reform.The main contents of this paper are:The first part is an introduction,which firstly introduces the research background,summarizes the present situation of China’s financial sustainability,and illustrates the problems China’s financial sustainability faces.Second,it builds a methodological system to measure China’s financial sustainability,which is convenient for readers to understand The research methods and conclusions of this thesis.Then,the paper describes the research methods and basic framework of China’s financial sustainability.The innovation of this article and the existing problems.The second part is the literature review.Firstly,the work done by foreign researchers is introduced,including the definition of financial sustainability indicators and some theories of financial sustainability.Secondly,the introduction of domestic researchers based on foreign theory The research includes the evaluation of China’s current fiscal sustainability and the prediction of future national and local fiscal revenues and expenditures;at the end of this chapter,it analyzes the space for the present study.In the third part,the dissertation analyzes the fundamentals of China’s financial conditions and uses the VECM model to analyze the financial sustainability of China in 1995-2013 and 2013-2017.On this basis,this article further from the government debt point of view,multi-dimensional analysis of China’s financial sustainability.On the basis of the above research,the fourth part predicts the trend of China’s macroeconomy and finance,calculates the potential output and GDP gap,quantifies the cycle-related fiscal revenue and expenditure,and scientifically estimates the potential GDP at the level of potential GDP Under the fiscal revenue and expenditure situation,forecast the trend of fiscal deficit.Based on the economic trends both at home and abroad,the Bank will reasonably estimate the potential financial risks to China in the future.The fifth part is the conclusion of the research and the real situation facing China on the issue of financial sustainability.On this basis,the paper puts forward relevant policy suggestions with the objective of ensuring the stable operation of the future finance and realizing the structural fiscal balance across time.