Page 27 - REPORT ON THE EXECUTION OF THE CENTRAL AND LOCAL BUDGETS FOR 2022 AND ON THE DRAFT CENTRAL AND LOCAL BUDGETS FOR 2023

instabilities, uncertainties, and unexpected developments will become more

regular in the external environment. Shrinking domestic demand, supply shocks,
and weakened expectations will continue to put us under considerable pressure,
uncertainties and destabilizing factors in the economy will increase, and gaps
between fiscal revenue and expenditure will continue to loom large.

From a fiscal revenue perspective, the Chinese economy is expected to pick up
in 2023, while the base for fiscal revenue remains relatively low due to the

implementation of large-scale VAT credit refund policy last year. This provides a
foundation for a recovery in fiscal revenue this year. At the same time, however, as
the foundation for economic recovery is not yet solid enough, considerable
uncertainty remains for fiscal revenue. The scale of revenue collected will be also

affected by further steps to introduce necessary supporting tax and fee policies.
From a fiscal expenditure perspective, we have obligatory commitments to

spending increases for key items such as technological advancement, rural
revitalization, and environmental protection; we need to continue strengthening
support to address areas of weakness in ensuring basic public wellbeing, including
elderly care, education, and healthcare; and we must maintain the necessary level

of transfer payments to support coordinated regional development and increase
the ability of primary-level governments to ensure the three priorities.

On the whole, the prospects for fiscal revenue and expenditure in 2023 remain
quite grave. We must therefore approach the situation from a comprehensive,
dialectic, and long-term perspective, identifying general trends and building
confidence in development, while at the same time keeping a clear head and

preparing ourselves for worst-case scenarios. In doing so, we will be equipped
with the conditions, ability, and confidence necessary to squarely meet all risks and
challenges.

2. Overall requirements for the preparation of the 2023 budgets and public finance
work
In order to ensure that preparation of the 2023 budgets and public finance

work are effective, we must do the following:
 Uphold the strong leadership of the Party Central Committee with Comrade Xi

Jinping at its core, take Xi Jinping Thought on Socialism with Chinese
Characteristics for a New Era as our guide, fully implement the guiding
principles from the 20th CPC National Congress, act in line with the plans

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