China will continue to issue a certain amount of long-term
treasury bonds as it sticks to its pro-active fiscal policy next
year, economists say.
Zhang Liqun, a senior researcher with the Development Research
Center under the State Council, said maintaining the continuity and
stability of the pro-active fiscal policy is crucial for China's
economic development.
But the amount of treasury bonds to be issued in 2004 will be
less than this year's number, he said, declining to give further
details.
Experts estimate the country will issue 110 billion to 120
billion yuan (US$13.3-14.5 billion) in long-term treasury bonds in
2004.
Meanwhile, the government will speed up the pace of shifting the
focus of its pro-active fiscal policy from stimulating economic
growth to sustainable development.
Zhang said it means that fixed asset investment backed by
treasury bond issuances will be reduced. The proportion of treasury
bonds in total investment has already decreased substantially as
investment from private companies and foreign-funded companies has
been quite active in recent years.
"The market forces have begun to play a leading role in the
country's economic development," Zhang said.
Zhou Jingtong, a senior economist with the State Information
Centre, said it is still necessary for the government to issue a
certain amount of treasury bonds.
"The government needs a lot of money to solve prominent economic
issues such as environmental protection, its western development
strategy, revitalization of the old industrial bases in northeast
China and boosting the growth of farmers' income," he said.
It means the pro-active fiscal policy will pay more attention to
solving problems that cannot be resolved by the market, Zhou
said.
Zhang said in the coming two or three years, the fiscal policy
will give key emphasis on solving the problems of laid-off workers,
rural issues, pension issues and unequal income distribution.
The government will also increase financial support for rural
areas and farmers.
"Agriculture is the base of China's economic development," Zhang
said.
But Zhang Peisen, a senior researcher with the Taxation Research
Institute under the State Administration of Taxation, said the
country will not be able to implement the policy over the
long-term.
Extra heavy government debts, which could possibly be brought
about by the fiscal policy, will cast a shadow over the country's
future economic development, he said.
China is still suffering from weak domestic demand despite
implementing the policy in about 1998.
Zhang Peisen said the failure to lift domestic demand is mainly
due to China's economic structure, which cannot be solely remedied
by the fiscal policy.
A final solution to the problem of sluggish domestic demand
rests with comprehensive economic reform, he said.
(China Daily November 24, 2003)