China to continue prudent fiscal policies next year

Updated: 2006-12-18 08:41

China will continue the prudent fiscal policies that it has taken since 2005, according to sources with the Ministry of Finance (MOF).

Zhang Tong, spokesman of the MOF, told Xinhua before the holding of the MOF work conference that in contrast to outspreading or austerity fiscal policies, prudent fiscal policies are more moderate and are generally taken when the total supply and demand are balanced but there are some structural imbalances.

China saw rising inflation threats, excessive rapid growth of investment in some regions or industries and bottlenecks of coal, electricity, petroleum and transportation supply in 2003.

Since 2005, the Chinese government began to take prudent fiscal policies that are different from the pro-active policies it has taken since 1998 to avoid the overheating of the economy, said Zhang Tong.

The prudent fiscal policies of the Chinese government focus on controlling deficit, improving economic structure, promoting reform, increasing revenue and decreasing expenditure, he said.

The Chinese government began to transfer the direction of the fiscal policies by adjusting the scale of the long-term treasury bonds for development and optimizing use of treasury bonds in investing projects.

According to statistics of the MOF, the deficit in the central budget decrease by 19.23 billion yuan (2.47 billion US dollars) last year with a year-on-year decline of 0.4 percentage points.

Zhang said China has been expanding its fiscal expenditure in sectors of agriculture, education, public health and social security in recent years.

The MOF appropriated 14.2 billion yuan as direct subsidies to over 600 million grain planters this year.

As part of the prudent fiscal policies, the MOF has been endeavored to minimize the income gap by improving income distribution policies and support the construction of an energy-efficient and environment-friendly society by taxation adjustment, said Zhang.

China's GDP grew by 10.7 percent in the first three quarters. During that period, 9.32 million people finding jobs in the urban areas, accounting for 104 percent of the annual target.

By the end of September, 182.4 million people have had basic old-age insurance, 150 million had basic medical insurance, 110 million had unemployment insurance, 94.47 million had work-related injury insurance and 22.3 million urban poor have got subsistence allowances in China, according to statistics of the MOF.

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