The suggestions of the Central Committee of the Communist Party of China on formulating the 15th five-year plan for national economic and social development (hereinafter referred to as the suggestions) clearly propose to expand effective investment,

Reflections on the 'Scale-Driven' Investment Model

Compared with the 13th Five-Year Plan, the investment during the 14th Five-Year Plan, especially public investment, has undergone significant optimization in terms of direction and structure. The effect of making up for weaknesses has also been incre

The first is the decline in investment efficiency and the accumulation of debt risks. Some local governments suffer from investment hunger syndrome, focusing on large projects that can easily boost GDP but ignoring investment returns; some infrastruc

The second challenge lies in structural imbalances and the persistent problem of overcapacity. There is a tendency in the investment field to prioritize hard infrastructure while neglecting software and human capital, as well as to prioritize traditi

The second is the rigid mechanism and market crowding-out effect. In many government-invested projects, problems such as unscientific decision-making mechanisms, irregular project management, and inadequate supervision and accountability often occur.

Finally, there are the challenges of insufficient project reserves and element guarantees. High-quality project reserves that are truly global, strategic, and leading are not achieved overnight. Currently, there are many small, scattered, and weak pr

The objective necessity of expanding effective investment

Effective investment is contrasted with ineffective investment or low-efficiency investment, which refers to investments that can not only stimulate current demand but also enhance long-term potential growth rate and generate positive social benefits

Firstly, effective investment is the "stabilizing rock" in response to complex internal and external situations and to stabilize the macroeconomic situation. Currently, China's economic development is facing triple pressures of shrinking demand, supp

Secondly, effective investment is the incubator for building a modern industrial system and cultivating new quality productivity. With the global technology revolution and industrial transformation entering a new round of development, competition amo

Thirdly, effective investment is a "equalizer" to make up for development shortcomings and promote the coordinated development of urban and rural areas. The problem of unbalanced and inadequate development in my country is still prominent. There is s

Finally, effective investment is the booster for promoting green transformation and achieving sustainable development. China's carbon emissions will peak before 2030, and the peak of net greenhouse gas emissions will decrease by 7% to 10% by 2035. Th

Direction and focus of effective investment

Following the principle of doing what it should do and not doing what it should not do, the financial investment in the 15th Five-Year Plan must precisely invest limited funds in the key areas that can best enhance national core competitiveness, prom

The first is to anchor technological innovation and industrial upgrading and build a solid foundation for high-quality development. Guided by the "high-quality promotion of the implementation of major national strategies and the construction of secur

Second, focusing on people's well-being and public services to solidify the foundation of common prosperity. Based on the "Suggestions" to "increase the proportion of government investment in people's livelihoods" and "strengthen investment in human

Third, focus on green, low-carbon energy and energy security to shape new advantages for future development. In accordance with the requirements of the "15th Five-Year Plan" to achieve the "carbon peak target on schedule and establish a clean, low-ca

The fourth is to strengthen infrastructure interconnection and smooth domestic and international dual circulation. In accordance with the "Recommendations" and "Improving the layout of infrastructure and public service facilities", in order to make u

Innovation-driven with Full Mechanism

During the 15th Five-Year Plan period, effective fiscal investment must place institutional and mechanistic innovation at the core, use systematic and deep-level reforms to remove obstacles and stimulate vitality, ensure that precious financial funds

Firstly, innovate investment decision-making and generation mechanisms to ensure precise investment. On the one hand, it is necessary to strengthen strategic planning guidance and establish a mechanism for closely linking financial investment with th

Second, innovate in the overall planning and investment mechanism of funds to improve the efficiency of resource allocation. One is to optimize the division of responsibilities and expenditure obligations, clearly defining the powers and responsibili

Third, innovate project management and performance evaluation mechanisms to achieve full-process closed-loop management. On one hand, comprehensively implement performance-based budget management, establish a resource allocation mechanism guided by p

Fourth, establish incentive compatibility and risk prevention mechanisms to ensure the sustainability of investment. First, it is necessary to improve the positive incentive and fault tolerance mechanisms, provide appropriate incentives to regions, d

Fifth, innovate the business environment optimization mechanism to achieve a better combination of 'effective market' and 'active government'. On one hand, fully implement the negative list system for market access to ensure equal entry and fair comp

(The author is a member of the Council of China Market Theory and an economics professor)