China to Continue Pursuing Proactive Fiscal Policy

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Last updated at: (Beijing Time) Wednesday, December 19, 2001

China to Continue Pursuing Proactive Fiscal Policy

China will continue to pursue a proactive fiscal policy next year, according to Finance Minister Xiang Huaicheng. This means the country will continue to issue special treasury bonds, as it did in the past four years, to fund infrastructural projects and generate demand to invigorate the economy, he said. However, Xiang added his ministry will guard against input into unnecessary projects.

The remarks were made on Tuesday as he addressed the finance ministry and local finance bureau officials on next year's fiscal work at a national finance meeting in Beijing.

Stabilize Taxation System

He said the ministry will also work to stabilize the current taxation system but also urged his colleagues to review and adjust fiscal and tax regulations and policies according to the rules of the World Trade Organization.

Other major economic officials have said projects launched in previous years, as well as this year, will be the focus of government investment.

New Accounting Rule

Xiang also said the country will improve its accounting system to accelerate the system's integration with international norms.

Sound Financial Condition

The minister said the government's financial condition is favorable.

Fiscal Income

During the first 11 months, fiscal income grew 23.1 per cent compared with the same period last year to reach 1.47 trillion yuan (US$177 billion).

Expenditure

Expenditure during the January to November period totalled 1.45 trillion yuan (US$175 billion), up 21.8 per cent.

Deficit

The government's actual deficit for the whole year is expected to be smaller than budgeted, he concluded.

Proper Policy---the Contributor

Xiang attributed the rapid growth of fiscal revenue to the proper economic policy that the Chinese Government adopted to maintain stable growth.

At the same time, he said the government has stepped up efforts to plug loopholes in tax collection.

Xiang said the central government will also increase payment to less-developed areas in the central and western parts of the country next year.

Minister Vows to Maintain Pro-active Fiscal Policy for Further Growth

Finance Minister Xiang Huaicheng has defended China's expansionary fiscal policy as necessary to keep the economy moving amid slowing export growth.

"If the pro-active fiscal policy is extinguished too early, then all our efforts might be wasted. This policy has effectively increased domestic demand and promoted continued rapid and healthy development of the economy," Mr Xiang said.

China implemented an expansionary fiscal policy, backed by massive state spending, in 1998 after the start of the Asian economic crisis.

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