China's finance chief said the nation may be running into fiscal
difficulties after the gap between spending and revenue widened
once again.
Fiscal revenue grew a year-on-year 3.4 percent to 380.78 billion
yuan (US$45.8 billion) during the first quarter of the year,
Finance Minister Xiang Huaicheng said yesterday.
But fiscal expenditure rose 23.9 percent to 351.135 billion yuan
(US$42.3 billion) during the same period, Xiang said at a press
conference held by the Information Office of the State Council.
The fiscal situation appears particularly bleak as the country is
implementing a proactive fiscal policy.
Last month, the National
People's Congress approved a budget deficit of 309.8 billion
yuan (US$37.3 billion) for the year and a special bond issuance of
150 billion yuan (US$18.1 billion) for 2002 to help attain 7
percent economic growth.
"We have to work very hard to increase fiscal revenue, while
reducing unnecessary spending and guaranteeing expenditure on key
areas such as social security, environmental protection and
agriculture," Xiang said.
He
expressed confidence that China's fiscal revenue will improve from
this month.
"I
am confident that fiscal revenue will increase by 10 percent this
year," he said. "A 10 percent revenue increase will help achieve
the 7 percent growth target of gross domestic product (GDP) this
year."
In
the first quarter of this year, China's GDP grew a year-on-year 7.6
percent, he said.
The government was forced to step in to initiate a proactive fiscal
policy in 1998, when the Asian financial crisis began to impose
negative effects on the country's economy, Xiang said.
China's exports grew 0.5 percent in 1998 compared with more than 20
percent in 1997 and the country's economic development soon began
to lose speed and deflation appeared.
The proactive fiscal policy proved to be the backbone that helped
the country withstand the Asian financial turmoil and stand firmly
against the world economic downturn, Xiang said.
Figures from the National Bureau of Statistics indicate that
proactive policy contributed 1.5 percentage points to the GDP
growth in 1998, 2 percentage points in 1999, 1.7 percentage points
in 2000 and 1.8 percentage points in 2001.
"Every coin has two sides," he said. "The proactive fiscal policy
also meant a lot of pressure for us."
The ratio of China's fiscal deficit to GDP rose from less than 1
percent in 1997 to 2.7 percent last year. The outstanding amount of
debts rose from about 300 billion yuan (US$36.1 billion) in 1997 to
about 1,600 billion yuan (US$192.7 billion) last year.
But China will have to continue the proactive fiscal policy this
year, because some new changes have occurred in the US economy
which will impact upon the nation, Xiang said.
(China
Daily April 17, 2002)