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The macro-economic policies and measures adopted by the Chinese government since 1998 have produced tangible outcome and China will accelerate the building of a public finance system that meets the needs of a socialist market economy, Chinese Finance Minister Xiang Huaicheng said Tuesday.
Delivering a speech on China's macro-economic situation and public finance reform at the China Forum of the 16th World Congress of Accountants, which opened here early Tuesday, the finance minister said the pro-active fiscal policy under implementation in China comprises three main aspects.
Firstly, to increase fiscal expenditures through issuing additional treasury bonds for investments in improving infrastructure, with emphasis on agriculture, afforestation, irrigation and water conservancy, communication and telecommunications, environmental protection, the improvement of urban and rural power grids and urban public utilities.
Secondly, to stimulate and guide the domestic demand for investment and consumption and to support foreign exports through tax policy adjustments, such as temporary suspension of regulatory tax for fixed assets investment, corporate income tax exemption for investment in equipment, restoring collecting income tax on interest and raising value-added tax (VAT) drawback rate for some exported goods.
Thirdly, to increase the income of low-income residents in urban areas through the adjustment of the income distribution policy.
"The above macro-economic policies and measures adopted by the Chinese government have produced tangible outcome," he said.
Against the background of global economic slowdown, China maintained a fast growth, with its growth rate all registering above 7 percent from 1998 to 2001.
Xiang projected the Chinese economy will grow faster in 2002 than in 2001.
The finance minister said the Chinese government has always paid close attention to the fiscal and economic sustainability.
In 2001, China's fiscal deficit accounted for 2.7 percent of the GDP and the ratio of the outstanding debt to the GDP stood at 16.3 percent, well below the internationally recognized safety line, he said.
Given China's current overall economic strength, deficit and debt at this levels are manageable, and China's debt service capacity has continued to strengthen, he added.
However, he stressed that China has taken pre-emptive actions by closely monitoring the changes of relevant indexes and adopting measures to prevent fiscal risks.
Speaking about the public finance reform, Xiang said the Chinese government has implemented all-dimensional and fundamental reforms in the system of revenue, expenditure and macro-economic management.
He said China's fiscal reform has witnessed breakthrough developments, with the state revenue growing by 2.14 times, or an average annual growth rate of 17.7 percent, and the ratio of state revenues to the GDP up from 11.2 percent in 1994 to 17.1 percent in 2001.
The finance minister noted the Chinese government will continue to actively push forward a whole range of fiscal reforms, thus accelerating the building of a public finance system.
He said that China will continue to improve and optimize the taxation system and to push forward steadily the reform of implementing fee-to-tax conversion.
China will draw on international experience to improve and deepen the reform in fiscal expenditure management on a pilot basis and to seek better fiscal macro-management, Xiang said.
(Xinhua News Agency November 20, 2002)
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