China to shift direction of government investment

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Last updated at: (Beijing Time) Thursday, December 25, 2003

China to shift direction of government investment

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The Chinese government is to readjust the direction and change the structure of investment funded by the issuance of treasury bonds, as it will continue to carry out a pro-active fiscal policy for the near future, Chinese Minister of Finance Jin Renqing said Wednesday.

Jin said that as the Chinese economy is in the rising period ofa new economic cycle, the government has to be alert and nip tendencies to both inflation and deflation in the bud. He said theChinese government had made the correct and necessary decision to readjust its economic and fiscal policies while maintaining the continuity of the policies.

Jin made the remarks at a national fiscal work meeting here. Hesaid the government would channel more T-bond funds to the construction of infrastructure in rural areas, public health facilities, and environmental-protection and water-conservancy projects. He said that government investment would also be tilted toward the development of the western areas of the country, rejuvenation of old industrial bases in northeast China and large-scale construction projects such as the Qinghai-Tibet railway.

Jin said the government would shift the focus of utilizing T-bond funds from maintaining the pace of growth of the economy to economic restructuring and balanced development.

China has pursued a pro-active fiscal policy since 1998, and successfully maintained rapid economic growth by expanding domestic demand with government investment.

Jin said that, after years of reform and development, the Chinese government has accumulated a huge amount of funds that canbe used to secure inclusive, balanced and sustainable development of society and the economy. He said the government should make better use of the funds gathered by issuing treasury bonds, so as to improve the economic returns from government investment.

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