China is considering increasing its fiscal deficit next year by 56 percent to help maintain growth amid the deepening global economic crisis, state media said.
The finance ministry has proposed raising the fiscal deficit next year to 280 billion yuan (US$40.7 billion), the China Business newspaper reported over the weekend, citing an unnamed source close to the ministry.
THIS YEAR’S DEFICIT
Chinese Finance Minister Xie Xuren (謝旭人) said early this year that China’s fiscal deficit this year would be kept below 180 billion yuan.
China’s top leaders were due to discuss the increased deficit proposal at a key annual economic conference that began on yesterday and concludes tomorrow, the report said.
The proposal to increase the fiscal deficit came after China announced a 4 trillion yuan stimulus package last month to spur growth by driving up domestic consumption in the face of flagging exports.
China’s economic growth slowed to 9 percent in the third quarter, the lowest in five years. The World Bank has forecast growth will drop to a 19-year low of 7.5 percent next year, down from 11.9 percent last year.
The report did not say how the increased deficit would be used.
The increase in next year’s fiscal deficit is expected to add pressure to the government’s balance sheet, as growth in fiscal revenue is forecast to slow down to 20 percent next year from 24 percent this year, the paper reported.