China to Issue 100 Billion Yuan Long-Term Treasury Bonds

China will adopt sustained proactive fiscal policy this year, including long-term treasury bonds worth 100 billion yuan to be issued, said Premier Zhu Rongji Monday at the opening meeting of the current session of the Ninth National People's Congress (NPC).

Zhu said the resulting funds will be invested mainly in infrastructure development, science, technology and education facilities, environmental improvement and ecological conservation projects and technological upgrading in enterprises, with more investment directed to the central and western regions of the country.

The funds raised from the additional treasury bonds will be earmarked for projects under construction so as to ensure that they can be completed and go into operation on schedule, Zhu added. He said, "We should work hard to raise the return on investments and make sure that no projects without solid funding or long drawn-out projects are launched.

Control must be tightened over project quality and inspection and audit supervision must be strengthened to ensure that all projects are built well and that no project funds are misappropriated, he said.

Over the past two years, the long-term bonds worth 210 billion yuan issued by the government to banks provided the impetus for over 420 billion yuan in bank loans and funds raised by enterprises, which were used to increase investment in infrastructure and finance the construction of over 5,100 projects. All the measures have not only contributed to current economic growth, but they also have laid a better foundation for long-term economic development, he said.

Over the past few years' deficits and the national debt have increased to some extent, but this is necessary to guarantee reform, development and stability.

"Because the servicing of treasury bonds is listed in this year's budget, the deficit is somewhat larger than originally expected. Nevertheless, the deficits and the issue of treasury bonds this year will stand at the previous year's levels and be kept within limits our national economy can sustain," he said. As long as our economy continues to grow rapidly and economic performance keeps improving over a fairly long period, he said "we will be able to repay the debt." At the same time, he said "we must take essential measures to guard against financial risks."

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