China Steps up Fiscal Transfer to Western AreasThe Chinese government is promoting fiscal transfer as a major financial support to accelerate development of the enormous western territory. Vice-Minister of Finance Jin Liqun said on April 10 that fiscal transfer will become the major channel for facilitating development of west China, as the short-term pro-active fiscal policy is going to be phased out.China now is funding projects in the west with money earned from treasury bonds. Since China began to adopt a relatively standardized fiscal transfer system in 1995, the amount of fiscal transfer among the richer and poorer areas every year has grown from two billion yuan to 9.5 billion yuan. Most of the money has gone to the west. At present, the central government's budget revenue accounts for only 13 percent of the gross domestic product, far lower than the ratio of 30 percent in developed countries. The Chinese government will try to increase this percentage while it is also allocating loans of lower interest rates and allowing for greater flexibility of repayment for loans to the west than other parts of the country. Jin said that these pro-active fiscal policies represent another form of fiscal transfer. He emphasized that the fiscal transfer to the west is aimed to upgrade infrastructure to attract foreign investment and international loans to fund projects in the poor areas. He said that China will learn from experience of other countries in reducing regional disparity. |
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