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Bigger role seen for fiscal stimulus

(Xinhua) Updated: 2015-09-15 10:27

Although growth uncertainties abound at home and abroad, China has plenty of policy options-especially on the fiscal front-to put the economy on track to deliver the around 7 percent annual growth target.

The Ministry of Finance has put forward multiple fiscal policies aimed at stabilizing growth, such as coordinating funds to accelerate project construction, activating idle money and widening tax breaks.

Other measures include guidance funds for small and emerging businesses, and promoting public-private partnerships.

China is battling a property downturn, industrial overcapacity, sluggish demand and struggling exports, which dragged growth down to 7 percent for the first half of the year.

On top of that, fresh pressures from capital market volatility, currency devaluation in emerging markets and slumping global commodity prices are further muddying growth prospects.

To achieve the full year growth target, the ministry said it will closely monitor the changing dynamics in the economy and respond with more effective and targeted fiscal policies to support growth.

Fiscal surplus for the January-July period was 383 billion yuan ($60.22 billion), leaving plenty of room for expansionary policies to increase the budget deficit to 2.3 percent of GDP for 2015, up from last year's 2.1 percent.

Within the annual budget, China could record a fiscal deficit of 2.1 trillion yuan for the August-December period, 200 billion yuan more than the same period last year, according to a recent report by China International Capital Corp.

In addition, the government's ongoing drive to activate unspent fiscal funds will make the expansionary fiscal policy more sustainable.

The more efficient use of idle fiscal funds is equivalent to increasing the government's disposable funds beyond the budget without raising the government sector's debt ratio, noted a CICC report.

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