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China Will Continue Proactive Fiscal Policy in 2001
China will continue the proactive fiscal policy and the prudent monetary policy this year, Minister in Charge of the State Development Planning Commission Zeng Peiyan said Tuesday.
"Since there is still no mechanism in place for ensuring sustained growth in total investment, we must continue to follow a proactive fiscal policy and maintain the strength of that policy at the level necessary to ensure that the strength of investment is adequate to fuel economic growth and thereby consolidate and develop the current trend in economic recovery."
Zeng made the remarks at the second plenary meeting of the ongoing 4th Session of the 9th National People's Congress, the top law-making body in China.
The supply of goods on the market is currently ample and sufficient capital is available in society, making it quite realistic to issue an appropriate amount of treasury bonds.
"Taking all factors into consideration, we suggest that the Central Government issue no more than 150 billion yuan of long- term development bonds by way of commercial banks this year," he said.
According to the top planner, the budgetary receipt for the year totaled 1.476 trillion yuan, and expenditures, 1.7358 trillion yuan, leaving a deficit of 259.8 billion yuan for the central finance. The local finances are balanced in their receipts and expenditure.
Zeng said the proactive fiscal policy is designed to stimulate growth in investment and consumption in other sectors of society through the expansion of government investment.
In addition to funding major projects to develop the western region, he said, funds from the new issue of treasury bonds will be concentrated on projects under way that are supported by treasury bonds so that they can be completed and put into operation as soon as possible.
"We will also increase revenue and reduce expenditures and ensure that taxes are collected in accordance with the law."
This year, the minister said, a prudent monetary policy will continue. All financial and credit levers available will be employed to boost domestic demand, restructure the economy and expand consumption.
"We will work to meet rational demand for funding from all quarters while watching out for financial risks and improving the quality of assets. We will make timely adjustments in the money supply to meet the requirements of economic development."
According to the minister, broad money (M2) is expected to increase by 13-14 percent this year and narrow money (M1), by 15- 16 percent. The net increase of cash in circulation is to be controlled at no more than 150 billion yuan and total lending by all financial institutions is expected to increase by 1.3 trillion yuan.
"We will enhance supervision and control of all financial institutions in an effort to lower their proportion of non- performing loans and raise their profits and capital adequacy," Zeng said.
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