China to raise fiscal spending to support economy
BEIJING: China will step up fiscal spending this year to support its economy, focusing on further cuts in taxes and fees for small firms, finance ministry officials said yesterday.
Mounting pressure on the world's second-biggest economy pushed growth last year to its lowest since 1990, even as Beijing stepped up stimulus measures and spurred banks to lend more.
The government may unveil more fiscal stimulus during the annual parliamentary meeting in March, including bigger tax cuts and more spending on infrastructure projects, economists say.
China's fiscal spending rose 8.7 per cent to 22.1 trillion yuan (S$4.42 trillion) last year, while revenue increased 6.2 per cent to 18.3 trillion yuan, said Mr Li Dawei, an official at the finance ministry.
China achieved last year's fiscal revenue target despite extensive tax cuts, he added.
Beijing delivered about 1.3 trillion yuan of cuts in taxes and fees last year.
Finance Minister Liu Kun said this month that China will further lower taxes and fees this year.
The government is also studying a plan to reduce social security fees to lighten the burden on small companies, Mr Liu said.
Policy insiders also expect Beijing to cut the value-added tax, which ranges from 6 per cent for the services sector to 16 per cent for manufacturers.
Policymakers' pledge of more aggressive tax reductions this year has fanned expectations that the annual budget deficit ratio could be lifted to 3 per cent of gross domestic product.
The government had lowered last year's deficit target to 2.6 per cent of GDP from 3 per cent the previous year - the first cut since 2012.
The slowdown in China has also raised concerns of rising indebtedness of local governments as they ramp up measures to support growth.
Local governments and state organisations should find a balance between stabilising growth and fending off risks, Mr Xi warned.
Outstanding local government debt stood at 18.39 trillion yuan at the end of last year, finance ministry official Hao Lei said. - REUTERS
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