Establish a negative list management mechanism for fiscal subsidies. Related documents are expected to be released soon.

China Securities Journal · China Securities Golden Bull Reporter recently learned that relevant documents regarding the establishment of a negative list management mechanism for fiscal subsidies are expected to be released soon.

On March 13, the State Council executive meeting proposed to implement negative list management for local fiscal subsidies based on previous work, and to develop a unified national negative list for local fiscal subsidies, further clarifying specific situations where local governments are prohibited from providing subsidies.

Experts believe that the establishment of the above mechanism will help promote fair competition, enhance the driving force of local economic growth, improve the efficiency of fiscal spending, encourage enterprises to focus on their core businesses, and increase competitiveness.

“Establishing a negative list management mechanism for fiscal subsidies is to set ‘traffic lights’ for local finances to regulate them, prevent disorderly competition, and enable them to better play a role in the macroeconomic governance system, as well as to better promote the construction of a unified national market,” said Bai Yanfeng, professor at the School of Finance and Taxation at Central University of Finance and Economics, in an interview with reporters.

Wu Zhiwu, senior director of the R&D department at China Chengxin Puyang Credit Evaluation Co., Ltd., told reporters that some localities currently provide exclusive subsidies on a case-by-case basis for individual enterprises or projects, and distribute subsidies based on conditions such as registration relocation or increasing local taxes. These situations, to some extent, create unfair competition and are not conducive to building a unified national market, requiring focused regulation.

“Building a negative list management mechanism for fiscal subsidies will promote the formation of a high-quality development pattern that combines proactive government actions with an effective market,” Bai Yanfeng said. The establishment of this mechanism will help local governments improve the efficiency and scientific management of fiscal expenditure, and also better guide enterprises to strengthen their internal capabilities, such as increasing R&D investment and product upgrades, to gain a competitive edge.

Wu Zhiwu believes that in the long run, as local governments focus on optimizing the business environment, innovating investment attraction models, and increasing investments in people’s livelihoods and technological innovation, local economies will usher in new development opportunities.

(Source: China Securities Journal)