Research on fiscal and tax policies for strengthening basic research investment

Increasing investment in basic research is an urgent requirement for achieving the strategic goal of building China into a leading player in science and technology, with fiscal and tax policies serving as key enablers to strengthen such investment. In recent years, China has significantly increased its investment in basic research. However, deep-seated and interconnected challenges remain in terms of growth rate, the structure of central and local expenditures, the diversified investment mechanisms, and the functional positioning of implementing entities. These issues are closely linked to the need for improvement in the precision, coordination, and effectiveness of fiscal and tax policies. To address these challenges, this paper proposes a framework for a fiscal and tax policy system that aligns with the inherent logic of basic research and effectively guides the dynamic coordination between social resources and government investment. This framework encompasses: adjusting the responsibilities and authorities between central and local governments to enhance fiscal expenditure guarantees; promoting budget management reforms to establish sufficient and stable support mechanisms; optimizing the system of tax expenditures to strengthen targeted and effective incentives; and innovating social mobilization mechanisms to improve the ecosystem for diversified investment.