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China Vows to Push Ahead Pro-active Fiscal Policy
Chinese Finance Minister said Thursday that China will continue to implement its pro-active fiscal policy and properly handle the debt issue, in order to maintain steady economic growth in the face of new changes in both domestic and world economic situations.
"We must be fully prepared for a possible negative impact of the world economic slowdown on our economy," Xiang Huaicheng told a press conference sponsored by the Information Office under the State Council.
China's fiscal revenue grew 27.9 percent year-on-year to more than 368 billion yuan (about US$44.5 billion) during the January-March period of this year, registering one of the highest growth in the past decade.
However, China's fiscal revenue registered a slower growth pace in March, Xiang said, adding that the annual growth rate may be lower than that of the first quarter.
"The slowdown of the US economy and slackness in the Japanese and Southeast Asian economies combined may have some impact on the economic growth of China this year," he said.
China's exports grew 14.6 percent year-on-year in the first quarter this year, compared with 40 percent in the same last year period.
The minister said China is pursuing a policy of stimulating domestic demand and self-reliant development.
He noted that this year, China enters the fourth consecutive year in pursuit of the pro-active fiscal policy. China plans to issue treasury bonds of up to 150 billion yuan to fund infrastructure projects and spur the development of the vast western areas.
In addition, the Chinese government will raise the salaries of 45 million public servants and government employees this year. Xiang said that a total of 80 billion yuan will be paid from the central and local coffers for this purpose.
Noting that China adopted the pro-active policy to reverse the trend toward deflation, he said that the major part of government investment was funded by public borrowing.
On the other hand, he said, the government will continue to increase payment and allowances for social security as the number of laid off workers is expected to rise.
Xiang said that the government is also reducing the amount of bad loans of State-owned banks by setting up asset management companies and swapping company debts for stocks.
"We are paying close attention to the issue of implicit debt. And I believe there will be no serious problems at all if we handle the issue properly," he said.
Noting that fiscal revenues of both the central and local governments have been growing at about the same rate over the past seven years, he said that the government will have enough income to pay back the public debts.
Chinese people have shown confidence in the credibility of the government. The latest issuance of treasury bonds this month were sold out so quickly that the government had to put on sale an additional 20 billion yuan-worth of T-bonds to meet the needs of individual demands Tuesday.
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