China's fiscal policy shift successful- Vice Minister
Updated: 2006-06-07 16:13
Vice Minister of Finance, Zhu Zhigang said on Tuesday that China's shift over
the past couple of years from a proactive fiscal policy to one that is more
prudent has proven successful.
China began to pursue a proactive or an expansionary fiscal policy in 1998 in
a bid to address the impact of the 1997 Asian financial crisis on the domestic
economy. It meant increased government spending to stimulate economic growth. A
prudent fiscal policy is designed to avoid dramatic government intervention in
Addressing a national meeting of officials from the central and provincial
finance departments, the vice minister said the central government slashed its
treasury bond-funded investment in infrastructure projects to 60 billion yuan
(7.5 billion US dollars) in 2006 from 150 billion yuan in 1998.
The cut in government spending on infrastructure projects was made in order
to balance the country's economic and social development after its economy got
back on track and some sectors started to overheat.
Reduced government spending on industrial sectors has meant more spending on
agriculture, education and social security, the vice-minister said.
China's overheated sectors such as iron and steel, aluminium and cement have
resulted in power shortages, rising prices of raw materials and overcapacity.