ABSTRACT
Fiscal policy should continue to be proactive. However, it should switch focus from increasing spending to cutting taxes. Efforts to reduce excess capacity should follow the principle of "market-driven, firms-led, organized locally, supported at the central level with a comprehensive set of policy instruments" and focus on addressing the root causes. A moderate fiscal policy stance should be adopted so as to avoid crowding out market activities and at the same time raise the cost of zombie lending. In the process of realizing the optimal allocation of factors, attention should be paid to the policy risks for the mergers and acquisitions between firms of mixed ownership and firms of different ownerships. The key mechanism is to guarantee the rights and interests of private enterprises at the institutional level; remove institutional and policy obstacles and entry barriers; and build an open, transparent and standardized market entrance.
