Proactive Fiscal Policy Safe, Effective: Minister

China has solid conditions and good reason for the go-ahead of its proactive fiscal policy, finance minister Xiang Huaicheng said Monday. "There are necessary conditions for China to continue with the proactive policy without big risks," he told the on-going Third Session of the Ninth National People's Congress.

There has been a considerable increase in deficit and debt due to the implementation of the proactive fiscal policy, Xiang said. "This is a price the government has to pay for exercising macro- control of the economy."

Faced with impact of the Asian financial crisis and a lukewarm domestic demand in 1998, the central government resolutely made a strategic decision to follow the proactive fiscal policy, which has so far achieved noticeable results. Not only was investment in infrastructure development increased, but support was given to technological upgrading of enterprises.

The minister said that the implementation of this policy has helped ensure social stability, maintain sustained, rapid and sound development of the national economy and raise the people's standards of living.

Total expenditures exceeded revenue last year, leaving a deficit of 175.9 billion yuan. And a deficit of 229.9 billion yuan will be left after setting revenue against expenditures for 2000. "By international standards, there is still some room for China to issue more bonds. As long as sustained, rapid and sound economic growth is maintained, economic efficiency is constantly improved and revenue is rapidly increased, our ability to service the debt will be continuously enhanced," the official said. Close attention should be paid to the national debt and the deficit, and efforts intensified to study the ability to collect revenue and the public risk, closely watch the operation of finance and work out necessary countermeasures, he said, adding great attention should also be paid to preventing financial risks, and efforts made to cut down on unnecessary expenditures and work hard to bring the deficit under control.

In addition, he said, policy measures should be improved to strengthen the guiding and stimulating role of budgetary funds.

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