The Fiscal Policy of China's Economic Kinetic Energy Conversion

Abstract

After a long period of rapid economic growth, China has grown to become the second largest economy in the world. The internal and external environment facing the new era of economic kinetic energy conversion has undergone profound changes. The inherent economic development model is facing unprecedented risks and challenges. How to crack down on the current difficulties and smoothly realize the continuous conversion of new and old kinetic energy of our economy so as to continuously promote the development and improvement of Socialism with Chinese Characteristics and achieve long-term peace and stability in the modernized countries? This is the question of the times and the responsibility of history. In order to classify and examine changes in the impact of several key fiscal expenditure changes on GDP, such as education expenditure, science and technology expenditures, social security and employment expenditures, and energy conservation and environmental protection expenditure, this paper analyzes the dynamic impact of fiscal expenditure on economic growth by constructing a VAR model. Research shows that the interaction between various fiscal expenditures, CPI, M2, and GDP is significant; as the number of periods increases, the contribution of fiscal expenditure to GDP basically increases. Under the framework of the modern fiscal system, the adjustment of China's fiscal policy should be based on changes in the economic environment and the situation. While strengthening demand management, it should focus on supply management and structural adjustment, and strengthen the coordination of fiscal and monetary policies so as to increase the overall effect of macro-control, strengthen the authority and effectiveness of macro-control measures to promote sustainable and healthy economic development.