China begins to curb budget deficit
( 2002-08-02 10:10 ) (8 )

China has begun to curb its growing budget deficit and is likely to dodge the risk of possible debt crisis by adopting proper measures in the next 5-10 years, an economist said Thursday.

Bai Hejin, of the Macro-economy Research Institute under the State Development Planning Commission, said the budget deficit is expected to rise to 62.5 billion yuan (US$7.6 billion) this year. The ratio between the budget deficit and gross domestic product (GDP) would grow to around three percent from 2.6 percent last year.

If the deficit-GDP ratio could be kept under three percent in the coming years, China would not have heavier pressure of debt repayment in the next 5-10 years than it has at present, Bai said at the 2002 Chinese Economic Environment Review seminar.

The pro-active fiscal policy that had been in place for five years is losing power this year, which Bai sees is the result of a government move to curb budget deficit.

As the amount of treasury bonds issued this year remained at the same level as last year, both the ratio between construction T-bonds and financial expenditure and that between T-bond investment and total fixed asset investment have been shrinking since 2000.