Active Fiscal Policy Boosts Economic Growth

The pro-active fiscal policy adopted by the Chinese government in recent years has played a crucial role in boosting China's economy, finance officials said Wednesday.

Since the second half of 1998, the Chinese government has issued 310 billion yuan worth of additional treasury bonds to fund infrastructure construction, fixed asset investment and technological upgrading.

At the same time, it has introduced tax incentives for exports and investment, increased welfare payments to poor city residents and raised salaries of government employees.

These measures began to show effect in the first half of this year as economic growth increased to 8.2 percent. Even higher growth rates were recorded in industrial production, retail sales, investment and exports. All major economic indicators have shown vast improvement.

Minister of Finance Xiang Huaicheng told a national work meeting on finance today that without implementing the pro-active fiscal policy, China would not have had a healthy economic situation.

Two years ago, the Chinese government greatly increased government investment to invigorate an economy suffering from deflation and the impact of the Asian financial crisis.

Through increasing input in economic restructuring and advanced technology, the government managed to combine short-term fiscal policies with long-term economic goals. It also combined preemptive measures against deflation with efforts to develop a market-oriented macro-control system.

As a result, the fiscal revenue reached its the highest level as the economy accelerated in the first half of this year.

Increasing investment in infrastructure construction and key projects have helped improve production and prices of energy and raw materials in the first half of the year, providing a healthy environment for long-term economic growth.

Through subsidizing enterprises that borrowed loans to upgrade technology, the government has effectively directed corporate investment to industrial restructuring and improved efficiency.

These measures, combined with government support for turning round loss-making state-owned enterprises (SOEs) have seen profits of industrial companies in China surged by 1.3 times over the same period last year in the first five months of the year. The index also improved 16.4 points to 107.3 points.

The Chinese government has also boosted the growth of exports and consumption by increasing tax returns, imposing tax on interest of savings deposits and eliminating arbitrary charges that government departments levied on consumer goods and services.

As a result, retail sales jumped 10.1 percent in the first half of the year. Meanwhile, exports surged by 38.3 percent.

Through increasing expenditure on social security, law enforcement, science, technology, education and agriculture, the Chinese government has continuously improved reforms within SOEs, economic restructuring and development of a market system.

The National Bureau of Statistics (NBS) predicts that the pro- active fiscal policy will help push the economic growth to a higher level this year than in the previous year.



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