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Recently, the Chinese Academy of Fiscal Sciences (CAFS) and the Social Sciences Academic Press (SSAP) jointly published the Blue Book of China’s Fiscal Policy: Annual Report on Fiscal Policy of China (2023).

This report advocates for a shift in the foundation of public expenditure expansion, adjustment and evaluation from traditional demand management logic to public risk logic. And the expansion of public spending should aim to preempt, address, and minimize public risks. Fiscally, we should follow the principle of minimal public risks while managing fiscal risks within acceptable limits. This involves monitoring public risks and dynamically adjusting public expenditures according to the nature, intensity, and structure of these risks. In light of increasing constraints on fiscal risks, this report proposes to reevaluate the traditional separation between fiscal and monetary policies, advocating for an integrated fiscal-monetary approach within macro-control. Accordingly, constraints on active fiscal policies, such as public expenditure expansion, should be moderately eased to include monetary risks (inflation risks).

1. We should shift the focus of active fiscal policy on consumption to enhance effectiveness in mitigating public risks.

2. We should adjust the government’s macro-control mode and improve the overall planning ability of the central government’s macro-control by reforming the fiscal system.

3. We should base the planning of social infrastructure projects on trends in population mobility, spatial distribution, and the challenges of an aging population.

4. We should expedite farmers’ citizenization, transform consumption scenarios, and create conditions for expanding domestic demand.