In another move to prop up China’s economy against the global financial crisis, the Ministry of Finance (MOF) and the Ministry of Commerce (MOFCOM) of the PRC jointly issued the Circular on Managing Capital for Invigorating Circulation and Expanding Consumption. The purpose of this document is to promote internal trade circulation and to spur domestic consumption. The Circular, which came into effect on February 5, 2009, provides guidance to local MOF and MOFCOM branches relating to the special funds specified in the State Council’s Opinions on Invigorating Circulation and Expanding Consumption, which was promulgated in December 2008.
The Circular mainly focuses on the establishment of three special funds in the central treasury: (1) the Special Fund for the Development of Rural Logistics Service System (Rural Logistics Fund); (2) the Special Fund for the Development of the Service Industry (Service Industry Fund); and (3) the Special Fund for the Development of Small- and Medium-Sized Business Enterprises. It also pledges subsidies for the renewal and upgrade of used cars.
The Rural Logistics Fund aims to promote the delivery of commodities in rural areas, the comprehensive services of local shops and supermarkets, the standardization of the inspection, storage, package and delivery procedures for fresh agricultural products, and the overall development of the logistics industry in general.
The Service Industry Fund serves to support service networks in many fields, including domestic services, resource recycling, market supervision and complaints procedures, market information exchange, breakfast supply, commercial storages, and used car trading.
MOF, MOFCOM and other relevant government agencies will separately issue administrative measures on each of the three special funds. Their local branches must substantiate their individual working plans according to these laws, and are required to report to MOF and MOFCOM, which may conduct special inspections accordingly.
Efforts in enhancing the logistics procedures are expected to be effective in improving trade circulation, which in turn may increase domestic consumption. This is an important endeavor for government investment plans that are critical to keeping the momentum of the Chinese economy.