Q: In recent years, the Chinese Government has issued a certain scale of long-term treasury bonds for construction every year. Where have the treasury bonds been invested? What part have they played in facilitating China's economic development?

A: Intended to propel an increase in investment, issuing long-term treasury bonds to get capital for project construction is the most prominent characteristic of the proactive fiscal policy implemented in recent years.

In 1998, to cope with the impact of the Asian financial crisis, China made a decision to increase input and expand domestic demand, and formally adopted a proactive fiscal policy. Treasury bonds, as an important tool of fiscal policy, played a crucial part in raising capital for construction, making up for fiscal deficit and in macro-economic control.

According to government statistics, the cumulative amount of long-term treasury bonds for construction issued between 1998 and 2004 was 910 billion yuan (US$110.04 billion), bringing an investment scale of about 5 trillion yuan (US$604.59 billion) and driving GDP growth by 1.5-2 percentage points each year. Thus, it could be ensured that the country could concentrate on building a group of large infrastructure projects to better the overall situation of the country.

In terms of the use of treasury bonds, the government has firstly ensured the input in and construction of large and crucial projects, including the Qinghai-Tibet Railway, west-to-east natural gas and electricity transmission projects, south-to-north water division project and a group of key water control projects, the construction of which has started in succession.

Secondly, it has improved rural production and living conditions, and increased public investment in rural areas, solving the problem of a severe shortage of public investment plaguing rural areas over the past years.

Thirdly, it has speeded up the realization of key large enterprises' goals in technological progress and renovation.

Fourthly, it has increased capital input in development of the west, settling the problem of China's western development handicapped by the shortage of capital input in large infrastructure projects in the areas of transportation, energy resources, telecommunications, land improvement and water conservancy.

Lastly, it has quickened the implementation of ecological conservation projects, given more support to social development, rural development and less-developed regions according to the requirements of public finance, dedicated greater effort in resolving the problem of uncoordinated economic and social development as well as urban and rural development, and kept on creating conditions for accelerating economic development in the western region.

Considerable progress has been made in ecological conservation such as reforesting cultivated land and planting trees in suitable areas. All of these advances are inseparable from the function of long-term treasury bonds for construction.

After implementing a prudent fiscal policy, the country will suitably reduce the issue of long-term treasury bonds for construction, with capital directed toward weak links in economic and social development, according to the rule of restructuring and differentiated treatment.

The country will continue strengthening construction of rural infrastructure and large water conservancy projects, supporting grain production and improving rural living conditions; increasing input in social infrastructure such as elementary education, public health systems, public security facilities, procuratorates and courts; investing more in ecological conservation and environmental protection; supporting development in the west, recasting of the old industrial base in northeast China, and maturation of the central region; helping the old revolutionary base areas, ethnic minority areas, border areas and poor areas to hasten development; reinforcing the construction of infrastructure related to frontier security and national defense, energy security and anti-terrorism; as well as helping those large projects under construction which need the support of treasury bonds, including the Qinghai-Tibet Railway, south-to-north water division and treatment of Huaihe River.