Fiscal deficit could widen to $192b next year

In the first 11 months of this year, government revenue rose 11.9 percent but spending was up 17.9 percent.

"The conflict between revenue and expenditure will continue for some time," Vice-Finance Minister Li Yong told a recent conference.

Jia Kang, head of the Ministry of Finance's Research Institute for Fiscal Science, said as the economy warms in the next year, China should edge away from aggressive fiscal policies.

He expected the country's absolute fiscal deficit level to decrease, and said the deficit-to-GDP rate will also be lowered.

That view was echoed by Liu Shangxi, deputy chief of the institute, who added that it is easy to lift the fiscal deficit, but hard to reduce it, so the government can't rely on raising debt to lessen expenditure pressures.

"The major problem is in the structure of fiscal expenditures, not the overall amount," he said.

Fan Jianping, deputy director of economic forecasts at the State Information Center, said that although markets regard a larger fiscal deficit as a likely signal of more economic stimulus, the marginal effect of such a measure is actually insignificant.

"A more important indicator would be the amount of funds raised by local governments - but that's also restricted by the rising debt repayment pressure faced by local authorities," Fan said.

 

weitian@chinadaily.com.cn

 

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