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China begins to curb budget deficit
China has begun to curb its growing budget deficit and is likely to dodge the risk of possible debt crisis by adopting proper measures in the next 5-10 years, an economist said Thursday.
Bai Hejin, of the Macro-economy Research Institute under the State Development Planning Commission, said the budget deficit is expected to rise to 62.5 billion yuan (US$7.6 billion) this year. The ratio between the budget deficit and gross domestic product (GDP) would grow to around three percent from 2.6 percent last year.
If the deficit-GDP ratio could be kept under three percent in the coming years, China would not have heavier pressure of debt repayment in the next 5-10 years than it has at present, Bai said at the 2002 Chinese Economic Environment Review seminar.
The pro-active fiscal policy that had been in place for five years is losing power this year, which Bai sees is the result of a government move to curb budget deficit.
As the amount of treasury bonds issued this year remained at the same level as last year, both the ratio between construction T-bonds and financial expenditure and that between T-bond investment and total fixed asset investment have been shrinking since 2000.
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