Chinese Premier Urges Better Fiscal Management

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Last updated at: (Beijing Time) Thursday, December 26, 2002

Chinese Premier Urges Better Fiscal Management

Chinese Premier Zhu Rongji has called for further reforms of the country's financial system and introduction of an proactive financial policy at a meeting with participants in a national conference on fiscal work which opened in Beijing Wednesday.

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Chinese Premier Zhu Rongji has called for further reforms of the country's financial system and introduction of an proactive financial policy.

At a meeting with participants in a national conference on fiscal work which opened in Beijing Wednesday, Zhu said reforms of China's financial and tax system underway since 1994 helped regulate income distribution among the central government, enterprises and individuals, ensuring a steady increase in the country's fiscal revenue.

The premier said the national fiscal revenue increased by 159.5 billion yuan (19.3 billion US dollars) annually from 1994 to 2001.It is expected to grow by some 180 billion yuan (21.8 billion US dollars) this year.

China has adopted an proactive fiscal policy and a stable monetary policy since the 1998 Asian financial crisis. Long-term treasury bonds valued at 660 billion yuan (79.8 billion US dollars) have been issued during the past four years.

Meanwhile, governments at all levels have used a total of 239 billion yuan (28.9 billion US dollars) to guarantee the basic livelihoods of people whose incomes were below the national average.

Some 406.6 billion yuan (49.2 billion US dollars) have been spent to increase wages for public servants and staff working in state-owned institutions since 1999.

During the past four years, the central government also helped to improve tax management in rural areas.

According to Zhu, fiscal management reforms in government departments have played significant roles in preventing corruptionin recent years.

The premier said it was important to increase fiscal incomes while reducing costs, to adjust and improve the fiscal budget, and avoid extravagance and waste, in order to better develop fiscal management in China.

Fiscal revenue up 12.4 percent

China's fiscal revenue grew a year-on-year 12.4 per cent during the first 11 months of this year, Finance Minister Xiang Huaicheng said at the national fiscal workshop.

The country's fiscal revenue, excluding debt income, stood at 1,648.8 billion yuan (US$198.7 billion) during the January-November period -- an increase of 182 billion yuan (US$21.9 billion) or 12.4 per cent on the same period of last year.

Fiscal expenditure excluding debt repayment reached 1,691.1 billion yuan (US$203.7 billion) during the period -- an increase of 240.7 billion yuan (US$29 billion) or 16.6 per cent compared with a year ago.

"The fiscal revenue accounts for 91.5 per cent of the year's budget, while the expenditure accounts for 80.1 per cent of the budget,'' Xiang said.

During the 11 months, the country's debt income was 495.8 billion yuan (US$59.7 billion), while the government spent 205.4 billion yuan (US$24.7 billion) repaying debt.

"Next year, China will continue to carry out a pro-active fiscal policy,'' Xiang said.

"Expanding domestic demand is a long-term and basic foothold for China's economic development, while the implementation of pro-active fiscal policy is an important measure, he said.China will continue to issue a certain amount of long-term treasury bonds to fund the construction of projects already underway and major State projects.

Xiang did not say how many construction treasury bonds would be issued next year. But insiders said they would be worth 140 billion yuan (US$16.9 billion).

According to Xiang, China will continue to adjust the expenditure structure next year.

"The State will increase its input to social security, raise employee salaries and increase income for the lowly paid people,'' he said.

It will also further increase expenditure on agriculture.

"Agriculture is the base of China's economic development,'' Xiang said. The government will expand the "fees-for-tax'' reforms in the countryside to increase rural people's incomes and step up its efforts to improve the work and living conditions in those areas.

With an aim of ensuring a stable increase of fiscal revenue, China will beef up tax collection next year, Xiang said.

The government will continue to clear the present tax preferential policies, he said. Local governments will not be allowed to offer preferential tax policies without authorization from the central government.

The present tax system should also be improved so loopholes can be blocked up.

Xiang said China will severely punish those who try to obtain tax rebates by cheating the government.

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