Q: In recent years, the Chinese Government has issued a
certain scale of long-term treasury bonds for construction every
year. Where have the treasury bonds been invested? What part have
they played in facilitating China's economic
development?
A: Intended to propel an increase in investment, issuing
long-term treasury bonds to get capital for project construction is
the most prominent characteristic of the proactive fiscal policy
implemented in recent years.
In 1998, to cope with the impact of the Asian financial crisis,
China made a decision to increase input and expand domestic demand,
and formally adopted a proactive fiscal policy. Treasury bonds, as
an important tool of fiscal policy, played a crucial part in
raising capital for construction, making up for fiscal deficit and
in macro-economic control.
According to government statistics, the cumulative amount of
long-term treasury bonds for construction issued between 1998 and
2004 was 910 billion yuan (US$110.04 billion), bringing an
investment scale of about 5 trillion yuan (US$604.59 billion) and
driving GDP growth by 1.5-2 percentage points each year. Thus, it
could be ensured that the country could concentrate on building a
group of large infrastructure projects to better the overall
situation of the country.
In terms of the use of treasury bonds, the government has
firstly ensured the input in and construction of large and crucial
projects, including the Qinghai-Tibet Railway, west-to-east natural
gas and electricity transmission projects, south-to-north water
division project and a group of key water control projects, the
construction of which has started in succession.
Secondly, it has improved rural production and living
conditions, and increased public investment in rural areas, solving
the problem of a severe shortage of public investment plaguing
rural areas over the past years.
Thirdly, it has speeded up the realization of key large
enterprises' goals in technological progress and renovation.
Fourthly, it has increased capital input in development of the
west, settling the problem of China's western development
handicapped by the shortage of capital input in large
infrastructure projects in the areas of transportation, energy
resources, telecommunications, land improvement and water
conservancy.
Lastly, it has quickened the implementation of ecological
conservation projects, given more support to social development,
rural development and less-developed regions according to the
requirements of public finance, dedicated greater effort in
resolving the problem of uncoordinated economic and social
development as well as urban and rural development, and kept on
creating conditions for accelerating economic development in the
western region.
Considerable progress has been made in ecological conservation
such as reforesting cultivated land and planting trees in suitable
areas. All of these advances are inseparable from the function of
long-term treasury bonds for construction.
After implementing a prudent fiscal policy, the country will
suitably reduce the issue of long-term treasury bonds for
construction, with capital directed toward weak links in economic
and social development, according to the rule of restructuring and
differentiated treatment.
The country will continue strengthening construction of rural
infrastructure and large water conservancy projects, supporting
grain production and improving rural living conditions; increasing
input in social infrastructure such as elementary education, public
health systems, public security facilities, procuratorates and
courts; investing more in ecological conservation and environmental
protection; supporting development in the west, recasting of the
old industrial base in northeast China, and maturation of the
central region; helping the old revolutionary base areas, ethnic
minority areas, border areas and poor areas to hasten development;
reinforcing the construction of infrastructure related to frontier
security and national defense, energy security and anti-terrorism;
as well as helping those large projects under construction which
need the support of treasury bonds, including the Qinghai-Tibet
Railway, south-to-north water division and treatment of Huaihe
River.