Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs, or the fact that local government debt has been rising at a time of strict central government regulation. The theoretical and empirical analyses provided in this study show that it is the financial resources under local government control that provide the implicit guarantee for local government debt. Such financial resources lower local governments’ financing costs but have the potential to lead to the contagion of financial risk through local government to the financial sector. Therefore, to look at the question solely in terms of either fiscal or financial sector guarantees will not be sufficient to resolve the problem of local government debt. The central government needs to coordinate fiscal and financial policies under a joint management framework in a way that rationally disperses and resolves the risks attached to local government debt and avoids the assumption of excessive risk by either sector. At the same time, close attention should be paid to local financial institutions’ asset quality and their money market reputation to avoid the risk of contagion from local financial institutions to local public finance.
Theoretically based on historical materialism, the historical initiative of the Communist Party of China (CPC) is a precious character of creating new prospects amid changing circumstances consciously and proactively to acquire benefits for Chinese people. Integrated into its centenary history and showing highlights in different historical periods, the CPC’s historical initiative features dialectical unity between problem orientation and mission pursuit, upholding fundamental principles and breaking new ground, regularity and consciousness, as well as the leadership of the CPC and the pioneering spirit of the people. To accomplish the Second Centenary Goal and advance national rejuvenation, the CPC will follow the path of socialism with Chinese characteristics under the guidance of Marxism, stay committed to achieving national rejuvenation, unite and rely on the people, and stimulate the spirit of innovation and creation, thereby pooling more proactive spiritual strengths to make greater contributions in the new era.
The great impact of monetary policy on bank risk-taking, facilitated by a liquidity mechanism, significantly complicates the macro-prudential supervision process. Surprisingly, limited scholarly research has delved into this particular issue. Hence, in this paper, the liquidity variable is introduced into the dynamic linear model to depict the liquidity mechanism by which monetary policy affects bank risk-taking. Based on micro-data from 133 commercial banks in China, this paper empirically tests using systematic Gaussian mixture models estimation and a panel smooth transition regression model. The findings reveal that while monetary policy does not exhibit a significant risk-shifting effect. A marked liquidity transmission effect, however, is observed, whereby easy monetary policy noticeably exacerbates bank risk-taking. This impact becomes more pronounced as liquidity levels improve. The most significant negative impact of monetary policy on bank risk-taking occurs when bank liquidity reaches approximately 43%. Moreover, when banks maintain high levels of liquidity, the statutory deposit reserve ratio exerts a greater regulatory effect than other monetary policy tools. Contractionary monetary policy imposes noticeably weaker restraints than expansionary monetary policy, particularly in banks with higher liquidity levels. Moreover, the interplay between monetary policy and bank risk-taking is contingent upon not just the liquidity level of banks, but also their asset size and capital adequacy.
To promote rural revitalization on the basis of consolidating and expanding the achievements in poverty alleviation after fulfillment of the objectives and tasks of poverty alleviation, it requires not only a smooth transformation of the working system, but a the transfer and continuity of micro policies. As the local practice shows, since the focus of the “tri-agriculture” work has shifted, the local governments have carefully implemented the decisions and deployments of the Central Committee of the Communist Party of China (CPC). In terms of the leadership system, system design, institutional teams, assessment mechanism and financial support, they have registered positive progress in the effective linkage of consolidating and expanding the achievements in poverty alleviation with rural revitalization. Meanwhile, they have been confronted in practice with the problems and difficulties of inadequate cognition of the effective linkage of the two strategies, incompatibilities of the responsibilities and capabilities of the departments at all levels, insufficient consideration of regional discrepancies, weak program guidance and assessmenting and openness to optimization of the poverty-alleviating assets management and utilization. It is advised to further deepen the cognition of linkage promotion, clarify the leadership system and assignment of responsibilities, differentiate the tempo and direction of linkage, strengthen the planning leadership and assessment application, and optimize the poverty-alleviating assets management and utilization mechanism to implement the effective linkage of the two strategies.
The Report to the 20th National Congress of the Communist Party of China (CPC) decides to “comprehensively promote the great rejuvenation of the Chinese nation through Chinese modernization” as a central task, listing nine essential requirements for Chinese modernization with the creation of a new form of human civilization as its goal. This paper analyzes the evolution of Chinese modernization led by the CPC and the pursuit of civilization, and reveals the inner connection and unity between Chinese modernization and the new form of human civilization. It is helpful to deeply understand the historical logic, realistic logic, and future logic of Chinese modernization, enabling better study and implementation of the spirit of the Report to the 20th National Congress of the CPC. Also, this paper boosts confidence in the path, theory, system, culture, and history of building a modern socialist country in an all-round way and promoting the great rejuvenation of the Chinese nation.
Digital economy, a new driving force for China’s economic development, creates a good opportunity for rural revitalization. This paper begins with a theoretical analysis of the impact of the digital economy on rural revitalization. Based on panel data from 30 provinces and cities in China from 2011 to 2018, as well as measurement-based digital economy development Index and rural revitalization index, the empirical test is conducted of the driving effect, mechanism and heterogeneity of digital economy on rural revitalization. Results show that the digital economy has a significant driving effect on rural revitalization, a conclusion that still holds even after taking into account endogenous problems and conducting a series of robustness tests. Technological innovation and human capital constitute the important mechanism for the digital economy to drive rural revitalization. Furthermore, the digital economy has a spatial spillover effect on rural revitalization, that is, it can promote rural development in neighboring areas. As regards various dimensions of rural revitalization, the digital economy can significantly promote ecological livability, civilized rural style, effective governance and prosperity. But its impact on the industrial boom is yet to appear. The western region enjoys more digital economy dividends in rural revitalization are more significant than central and eastern regions. Rural revitalization requires the government to deepen the integration of the digital economy and agriculture and implement a differentiated digital economy development strategy.
The rural revitalization strategy represents a quantum leap in both the theory and practice of rural development in China, and serves as a crucial solution to address the array of challenges facing rural areas. Multi-dimensionally, the rural revitalization strategy sets out the general requirements of “building rural areas with thriving businesses, pleasant living environments, good social civility, effective governance, and prosperity,” which echo the measures of new urbanization: efficient, green, humanistic, well-governed, and inclusive. Specifically, “building rural areas with prosperity” aligns with the development requirement of urban-rural dual structure theory; “building rural areas with thriving businesses” meets the development requirement of the industrial division of labor and integration theory; “building rural areas with pleasant living environments and good social civility” follows the development requirement of sustainable development theory; and “building rural areas with effective governance” tallies with the development requirement of rural governance theory. Urbanization theory, urban-rural dual structure theory, the industrial division of labor and integration theory, sustainable development theory, and rural governance theory serve as crucial theoretical references for the rural revitalization strategy, helping make clear its conceptual underpinnings.
Demonstration creation for rural vitalization is an important part of the rural vitalization strategy of the central leadership. This paper offers a systematic exposition of the theoretical logic of demonstration creation in objective necessity, methodology value, key path of reform and in novation, multiple functions. An analysis is conducted of the advancing path of demonstration creation from building consensus, clarifying goals and requirements, and coordinated advance. Further, it depicts a roadmap for the creation of model villages, covering characteristic industry development, rural ecological livability, rural civilization, increase in rural income, village-level social undertakings and effective governance led by the building on the Communist Party of China. On this basis, it offers policy suggestions on responsibility implementation, basic adherence, process management and monitoring evaluation to promote demonstration creation in a vigorous, orderly and effective manner. Hopefully, it is of guiding significance for the “100-county, 1000-town and 10,000-village” demonstration creation for rural revitalization across the country.
In essence, understanding the relationship between supply-side structural reform and demand-side management requires grasping the interplay between supply and demand. Supply and demand are interdependent and interactive, and their equilibrium determines the equilibrium values of micro and macroeconomic variables. Focusing solely on either supply or demand, regardless of the time length, is one-sided. To promote supply-side structural reform, China should depend on demand and take a measured approach to its expansion. In the absence of demand, the supply-side structural reform would lose its direction and purpose. Enhancing demand-side management involves delving deeper into supply-side structural reform because the scale and growth of demand, alongside changes in demand structure, are fundamentally influenced by institutional factors. Hence, further reforming the systems and mechanisms that hinder the optimization of demand structure and the growth of demand is precisely what supply-side structural reform should entail.
Over the past century, the Communist Party of China (CPC) has led hundreds of millions of farmers through five stages (rural revolution, rural construction, rural reform, rural transformation and rural revitalization) to forge a road of rural development with Chinese characteristics. In the course of constant exploration and innovation, the CPC has always adhered to its original aspiration and founding mission of seeking happiness for the farmers, taken liberating and developing the productive forces as the central principle, regarded coordinating urban and rural development as the action guideline, and set “achieving common prosperity” as the target direction, and accumulated valuable historical experiences in three aspects: Firstly, the CPC has emphasized the vital role and pioneering spirit of farmers, effectively mobilizing and organizing the broad participation of rural masses. Secondly, it has committed to the collective ownership of rural land and managed the relationship between farmers and land. Lastly, the CPC has remained focused on the interests of farmers, continuously advancing reform and innovation in accordance with the changing times.
By incorporating both the fire sales contagion mechanism and the bankruptcy contagion mechanism into a bank network model, this paper examines how risks are generated under dynamic shocks. In particular, this paper constructs systemic risk indicators suitable for analyzing multiple rounds of contagion under different shocks (time dimension) and from institutions and assets (spatial dimension). Indicators that measure the indirect relevance between institutions and between assets are also innovatively built. It is found that due to deleveraging or bankruptcy among a large number of banks, the systemic risk exhibits an upward trend marked by intermittent jumps under varying intensities of shocks. Risks are generated mainly through the fire sales contagion mechanism of deleveraging under small shocks, and through the bankruptcy contagion mechanism under large shocks. In terms of influencing factors, a stronger indirect relevance, a lower leverage skewness and a higher leverage level in the banking system lead to higher risks. In particular, the influence of leverage skewness on systemic risk is stronger than that of leverage level.
Comprehensively implementing supply-side structural reform is a major adjustment of ideas and focus of China’s economic development, made by the Communist Party of China (CPC) Central Committee on the basis of a comprehensive analysis of the world’s long-term economic cycle and the new normal of China’s economic development. As a major innovation to adapt to and lead the new normal of economic development, it has become a strategic deployment that concerns the overall long-term development of China’s economy and society. Before the 19th CPC National Congress, the main tasks of supply-side structural reform were cutting overcapacity, destocking, deleveraging, reducing corporate costs and shoring up weak links. After the 19th CPC National Congress, while continuing to do the tasks, the CPC Central Committee stuck to the main direction of improving the quality of the supply system, enriching the connotation of deepening supply-side structural reform. Since 2016, China’s supply-side structural reform has achieved remarkable results, and has been widely recognized and positively evaluated both internationally and domestically. The reform provides not only a solid foundation and valuable experience for China’s subsequent reforms, but also a useful reference for developing countries.
Beginning with increasing effective demand, the demand-side reform advocates for the strategy to expand domestic demand, rectifies distortions in the demand structure, and further aligns demand and supply by reforming the mechanisms for demand formation and regulation, matching supply and demand structures, and easing restrictions on demand. This will enhance economic growth potential and operational efficiency. The demand-side reform contributes to developing a super-large-scale market and optimize market functions to form a unified national market. It also helps address significant structural distortions within domestic circulation and move faster to form a new development pattern of dual circulation. As demand-side reform inevitably deals with the vested interests of stakeholders, it presents challenges on par with supply-side structural reform. Therefore, due attention must be given in terms of priority and weight by increasing operational and property household income, transforming government functions, rectifying any excessive market-oriented reforms in certain public service sectors, among others.
This paper analyzes rural revitalization under the goal of common prosperity. Firstly, on the basis of making clear what common prosperity is in the new era along with its connotation, the connotation of rural revitalization under the goal of common prosperity is systematically delved into six dimensions: subject, motivation, content, path, process, and goal. Secondly, the intrinsic relationship between common prosperity and rural revitalization is examined from the perspectives of rural revitalization, common prosperity, and development. Thirdly, grounded on theoretical analysis, this paper outlines strategic key points for rural revitalization under the goal of common prosperity upon applying designing principles to practice.
How small and medium-sized (SMS) rural banks, as the main banks offering rural financial services, serve all-round rural revitalization is a vital realistic and policy issue for the time being. Now, SMS rural banks are confronted with many shortcomings in serving rural revitalization due to dull financial service supply chain circulation and lack of coordination with the rural industry supply chain. The research based on survey data and typical cases shows that the key to solving these problems is to realize a double chain linkage of the financial service supply chain and the rural industry supply chain: The financial service supply chain and the rural industry supply chain should make use of their common infrastructure, share the digital technology capacity and data handling capacity and promote the linkage of customers, channels and scenarios in all links of the two supply chains in a bid to realize mutual promotion and improve the quality and efficiency of the two chains and hence fuel the all-round rural revitalization through industrial revitalization. Double chain linkage can be achieved through five major effective means: in terms of data, collaborating with digital rural governance and strengthening data collection and utilization; in terms of industry, collaborating with core entity enterprises and strengthening the supply chain financial service capacity; in terms of ecology, collaborating with internet technology companies and enhancing ecological, scenario and technological enabling; in terms of channels, collaborating with rural service and focusing on channel linkage, offline network, mobile services and village financial officers, etc.; and in terms of cooperation, constructing the common infrastructure of SMS rural banks and boosting the efficiency of digital enabling innovation.
In recent years, the changes in the external environment and domestic development conditions have promoted the transformation of China’s economy to one dominated by domestic circulation. In December 2020, the Communist Party of China Central Committee put forward the demand-side reform for the first time in order to prepare China for the new development stage of the 14th Five-Year Plan (2021–2025) and to promote the new strategic deployment of China’s high-quality development. Based on the paths and direction of the current 14th Five-Year Plan (2021–2015) to build a new development pattern, this paper elaborates on the theoretical connotations of the demand-side reform, points out the bottlenecks such as the unreasonable demand structure in China, the mismatch between the industrial system and the high-level demand, the resulting demand spillovers, the poor demand channels, and puts forward the current approaches to the demand-side reform in China.
Industry interaction is becoming an important approach to promoting high-quality economic development. In this paper, the multi-sector general equilibrium model is developed to clarify the theoretical mechanism among industry interaction, structure transformation, and high-quality economic development; the empirical tests are carried out based on the provincial panel data from 2000 to 2017; and the empowerment paths for digital technologies are explored to drive high-quality economic development. The findings are as follows. (1) The industry interaction can promote high-quality economic development in China on the whole, but it shows a significant imbalance and a healthy two-way promotion mode have not been formed. (2) The impact of industry interaction on high-quality economic development is significantly heterogeneous at the sector and regional levels. (3) The current unhealthy industry interaction may widen the productivity gap between manufacturing and service sectors, and transform China’s economic into service-oriented structure, thus leading the economic development to a vicious circle of “low efficiency to low-end servitization and further to lower efficiency,” and hindering the sustainability of high-quality economic development. (4) Digital technologies can break the development dilemma and achieve high-quality economic development by alleviating structural contradictions, boosting healthy industry interaction, and narrowing the productivity gap among sectors. The conclusions provide empirical evidence for the government to promote the integration of advanced manufacturing and modern service sectors and achieve high-quality economic development.
By constructing a New Keynesian dynamic stochastic general equilibrium (DSGE) model that embeds structural fiscal policy and contains two types of households, labor intermediaries, manufacturers, the central bank, and fiscal departments, and based on China’s macroeconomic controls that combine proactive fiscal policy with prudent monetary policy in the context of supply-side structural reform, this paper compares and analyzes the macroeconomic effects of the various types of proactive fiscal policy instruments, and measures the impact of the choice of anchors for monetary policy on the long-term welfare loss caused by the various fiscal policy instruments. This study finds that the consumption-oriented fiscal expenditure increase and labor income tax reduction policies have the most significant macroeconomic stimulus effects in the short term, but attention should be paid to the disadvantage that they may lead to the rise of government debt risks; and in the long term, the role of production-oriented fiscal expenditure policies in guaranteeing the stable operations of China’s economy should be brought into play. In addition, once the implementation of proactive fiscal policy lasts for too long, their long-term effects may be weakened, with negative macroeconomic impacts. In order to mitigate the resulting long-term economic fluctuations and welfare loss, prudent monetary policy should be fine-tuned with price stability as the anchor.
Modernizing the industrial system is an integral and strategic priority within the broader scope of modernizing the economic system. It demands a focus on boosting China’s labor productivity and self-sufficiency rate of key technology products, with the aim to advance industrial upgrading and optimize the industrial structure. Hence, China must promote the strategy to expand domestic demand and accelerate the creation of a new development pattern from the supply side, coordinate economic development across regions, establish a national unified market, and create a more open industrial system. Specifically, China should increase funding in scientific research and experimental development, enhance the innovation capacity of core technologies in key fields, optimize the digital economy structure, strengthen the modern service industry, raise the labor productivity of the service industry, maximize the market’s decisive role and the government’s function in resource allocation, and build a talent system tailored to the modern industrial system.