China recorded a fiscal surplus of 283.7 billion yuan (US$34.2 billion) during the first 11 months of this year.

The country's fiscal revenue stood at 2.44 trillion yuan (US$294.3 billion), an increase of 23.5 per cent compared with the same period a year ago, Finance Minister Jin Renqing said yesterday.

The fiscal expenditure of 2.16 trillion yuan (US$260.1 billion) represents an increase of 14.1 per cent.

The country's fiscal revenue is likely to reach 2.6 trillion yuan (US$313 billion) for the whole of this year, Jin said at the annual national finance conference staged in the capital Beijing.

With an aim to beef up and improve the country's macro control, and to promote a fast and solid economic development, the central government has decided to carry out a 'prudent fiscal policy' next year. "The government will reduce the amount of the central fiscal deficit to prevent both inflation and deflation," he said.

He said earlier in an article published in People's Daily newspaper that the country will keep the central fiscal deficit at about 300 billion yuan (US$36.1 billion) in the near term.

"The fiscal deficit/GDP ratio will drop to about 2 per cent next year," he said.

"The prudent fiscal policy will play a more active role in removing the unhealthy and unstable factors existing in the economic development and stabilizing the performance of the macro economy," Jin added.

"It will also play an important and active role in consolidating the base for long-term social and economic development and increasing the sustainability of the development," he said.

Central finance will continue to offer preferential fiscal and tax policies for the development of the western areas and renovation of the old industrial areas in Northeast China.

The government will reduce the issuance of special bonds for construction.

The government says it will beef up construction of rural infrastructure projects and large water projects, he said.

It will also support grain production and improvement of the rural production and living conditions, it said.

Development in the old revolutionary base areas, border areas, poor areas and areas where ethnic minority groups live will be backed, and support will be given to key projects such as construction of the Qinghai-Tibet Railway and the west-to-east gas project.

While maintaining a stable growth in the fiscal revenue, the government will actively push forward the structural tax system reform, Jin added.

The government will firmly push forward the value-added tax reform, which started on a trial basis in the country's northeast provinces from July 1 this year.

The reform, which allows companies in the old industrial bases of Jilin, Liaoning and Heilongjiang provinces to claim tax deductions when buying new machinery equipment, will be expanded to some other regions.

(China Daily December 22, 2004)