China to cut government spending in 2005
BEIJING - To boost state efforts to slow economic growth to a more sustainable pace, the Chinese government would trim spending next year, said Vice Finance Minister Lou Jiwei.
"We will reduce the size of the budget deficit and cut public investment," he added. "The success we have achieved in adjusting economic growth is still preliminary and incremental."
Growth in the world's seventh-largest economy was expected to slow to 8.5% next year from an estimated 9.3% in 2004, the State Information Center, a top government think tank, said in a report released at the conference attended by senior government officials.
Investment growth slowed to 28% in the first three quarters after surging 53% year on year in January and February. However, Wang Yu, a senior official with the People's Bank of China warned growth would probably pick up again.
In the first eight months of this year, the central government's investment in roads, bridges and other fixed assets rose 4.3% to 501 billion yuan (US$61 billion), according to statistics published by the State Bureau of Statistics.
After adding spending by local governments and state-owned enterprises, the total investment jumped 26% to 1.86 trillion yuan.
However, "a positive fiscal policy does not simply mean cutting investment," Lou said, adding "necessary spending is important for development of some sectors."
Lou also pledged to help state-owned banks and other enterprises in reform.
(Asia Pulse/XIC)
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