Speaking at the second plenary meeting of the Fourth Session of the Ninth National People's Congress in Beijing, Xiang said the country has forecasted a year-on-year central and local revenue increase of 10.3 percent, with a 9.3 percent increase in expenditure.

But the budget deficit in 2001 would be virtually unchanged from the actual deficit last year.

"The national economy is expected to move into a virtuous cycle in 2001 with better quality and higher efficiency growth that should ensure a solid increase in revenue," said Xiang.

He delivered reports on the implementation of central and local budgets for 2000 and on the draft central and local budgets for 2001 to the ongoing congress meeting.

According to Xiang, massive expenditure will spur economic growth this year and help create jobs for millions of laid-off workers and redundant agricultural labourers.

The draft budget gives priority to the implementation of the western development strategy, improvement of the social security system and the tax-for-fees reform in rural areas. A moderate increase is reported in defence spending.

Tax reform aiming to improve farmers' income is also a great concern in this year's budget.

According to the draft budget, the country will also issue a total of 100 billion yuan (US$12 billion) worth of construction bonds and 50 billion yuan (US$6 billion) in special bonds to finance the development of western China.

"These funds will be mainly invested in giant infrastructure projects in western China," said Xiang.

The projects will include a gas pipeline to transport gas from western China to East China, the west-to-east power transmission project, a water diverting project from southern to northern China, the construction of a railway linking Qinghai Province and the Tibet Autonomous Region.

But Xiang also said the slowdown in the global economy could take its toll on China's exports this year, and the instability in world economic growth this year could affect China's export trade.

China had a trade surplus of US$24.1 billion in 2000, down from US$29.1 billion in 1999.

Exports jumped 27.8 percent year-on-year to US$249.2 billion in 2000, while imports surged 35.8 percent to US$225.1 billion.

(China Daily 03/07/2001)