The prudent fiscal policy the authorities have said they will
pursue to help cool off the economy will naturally lead to less
public spending on construction projects next year.
This means that as the national coffers continue to swell, the
government will have more financial resources to tap to improve the
public welfare. Policymakers should seize this golden chance by
rapidly shifting the focus of their fiscal policy to spread the
benefits of our phenomenal economic growth to the people.
The Ministry of Finance confirmed on Wednesday that the
country's fiscal revenue reached 4.8 trillion yuan ($651 billion)
in the first 11 months, up 33.5 percent year-on-year, and is
expected to hit 5.1 trillion yuan for the whole year, 31 percent
more than in 2006.
Growing fiscal revenues have allowed the government to increase
spending on public welfare programs. Statistics show that central
and local fiscal spending on healthcare increased by 40.6 percent
during the January-November period. Spending on education grew by
32.7 percent, and social security and employment outlays increased
by 28.6 percent.
Such rises in government expenditure on public welfare, on their
own, may appear spectacular. Yet, they seem to be simply keeping
pace with the growth in fiscal revenue this year.
In view of the huge gap between the people's need for such
services and the inadequate supply, these increases remain far from
sufficient. To significantly raise people's living standards, the
government should resolve itself to further tilting its fiscal
policy in favor of public services.
On one hand, more fiscal support for education, healthcare and
social security will directly improve people's wellbeing and thus
facilitate the development of a harmonious society. After all, the
ultimate goal of economic growth is to improve people's lives.
On the other hand, a people-first fiscal policy will free
consumers from the huge health and education burdens that have so
far prevented them from consuming enough to drive economic
growth.
There is no doubt that China can no longer rely on investments
and exports for growth. A fundamental change in the country's
growth pattern will depend on whether the country can effectively
boost domestic consumption.
(China Daily December 21, 2007)