Date: 23 Feb 2009 Provided by: China Knowledge
China has proposed a record budget deficit of RMB 950 billion for 2009 to support its economic stimulus packages, sources reported.
A proposal for the RMB 950 billion deficit, after being revised several times, will be submitted to the National People's Congress (NPC), the country's top legislative body, for approval during its annual session in March. The proposal suggests that RMB 760 billion be spent on infrastructure and public facilities.
The record RMB 950 billion deficit, representing 3% of China's GDP this year, eight times more than that of last year, not only reflects China's efforts to put more into infrastructure to boost growth, but also the government's expectation of a continuing decrease in tax revenue growth.
China posted a fiscal deficit of RMB 111 billion in 2008, and a record fiscal surplus of RMB 173.9 billion in 2007.
The GDP growth in the third quarter of last year plunged to a five-year low, due to the global financial recession. In November China announced an RMB 4 trillion stimulus package to be enacted over the next two years, of which RMB 100 million was deployed in the fourth quarter of 2008.
It is said that a plan to raise the threshold for personal income tax to expand domestic consumption has also been submitted to the NPC for discussion.