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The Chinese Government would trim spending next year in a bid to boost State efforts to slow economic growth to a more sustainable pace, Vice Finance Minister Lou Jiwei said at a conference in Beijing on Saturday.
"We will reduce the size of the budget deficit and cut public investment," Lou said. "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 percent next year from an estimated 9.3 percent 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 percent in the first three quarters after surging 53 percent 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 percent 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 percent 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.
Separately, Liu Mingkang, head of the China Banking Regulatory Commission (CBRC), said in a statement Friday that Chinese banks should meet reasonable corporate demand for loans, especially those for small and medium-sized enterprises (SMEs).
"While continuing to control risk, banks should actively improve financial services and support reasonable demand for capital by firms that meet credit conditions," Liu said.
Banks should make loans based on a firm's credit record and whether it met requirements on environmental protection and land use, rather than a blanket ban on loans to certain industries, he said, adding smaller firms faced extra difficulties in getting loans.
Analysts believe some direct credit controls could be rolled back following last week's rate rise, and some expect more rises to come.
(Xinhua News Agency November 8, 2004)
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