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China Highlights New Year Fiscal Emphasis
    2009-01-06 11:06:28     CRIENGLISH.com

China's top finance official says that in response to the bleak worldwide economic situation Beijing will continue to activate financial policies, expand investment in public projects and cut taxes. Chen Xi has the details.

During a national conference in Beijing, China's finance minister, Xie Xuren, detailed the economic situation in China amid the global economic downturn.

"The country's fiscal revenue started to decline in the second half of 2008 because of the economic slowdown and corporate profits also declined. The central government has issued a series of preferential policies in the form of tax cuts to boost economic advancement. However the growth rate is continuing to fall."

According to the official, China's fiscal revenue last year is expected to exceed 6 trillion Yuan, or nearly $860 billion U.S. dollars, representing a year-on-year increase of 19 percent, comparing with 32.4 percent in 2007.

The finance minister forecast that the downward trend would continue in 2009, which would make it "a difficult fiscal year" marked by falling revenue growth and surging expenditure.
But he highlighted that the expansion of investment in public projects tops the governmental agenda for the New Year, particularly with regards to infrastructure and building, environmental protection and disaster relief reconstruction.

Yuan Gangming, a senior researcher from the 'Chinese Academy of Social Sciences', says the new moves, aimed at speeding up domestic economic growth, are different from those found during the southeast Asian economic crisis a decade ago.

"Much different from that in 1998, this investment will focus heavily on issues closely related to public welfare. The previous ones targeted major infrastructure building, while the current focus lies in low-cost housing and rural projects, such as irrigation and road works."

This governmental think-tank researcher also applauded economic policies aimed at Chinese farmers, particularly providing subsidies to help them purchase farm equipment and electronic home appliances.

China has declared that it will implement a 'proactive fiscal policy', its code for expansionary spending, with the central government already pledging to usher in a stimulus package totalling 4 trillion Yuan, or some 580 billion US dollars.

The researcher Yuan Gangming gave his analysis on this pledge to reduce taxes.

"The expansion of investment in public projects also needs the guarantee of tax revenue. The source of this large capital can not be secured by a general tax cut."

Yuan Gangming further elaborated that China would continue to cut corporate and personal tax in 2009 and that it would increase tax rebates for exporters, especially those in labour-intensive sectors.

Chen Xi, CRI News



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