China will reduce the volume of long-term treasury bonds issued for construction projects in the next two years but won't eliminate them, said Su Ming, deputy director of the Finance Science Research Institute under the Ministry of Finance.

"The focus of long-term construction treasury bonds next year will be the agricultural sector, environmental protection, energy-saving and other industries crucial to the national economy and supporting those unfinished projects," Su told an ongoing iron and steel industry conference in Beijing.

He didn't reveal the scale of the long-term issues for next year, but said a key concern was the large fiscal deficit.

The central fiscal deficit was set at 245 billion yuan ($33.3 billion) for 2007, down 50 billion yuan from 2006, and treasury bond issues for long-term construction projects were set at 50 billion yuan, down 10 billion yuan, said Finance Minister Xie Xuren Wednesday.

China will maintain a prudent fiscal policy next year, according to the key Central Economic Work Conference held in early December.

"The prudent fiscal policy should have a tightening effect on the economy and the country should reduce the scale of the fiscal deficit and long-term treasury bonds", Wang Tongsan, an expert with the China Social Sciences Academy, said earlier this week.