China to maintain prudent fiscal policies in 2007

In the face of inflationary threats and structural imbalances, China will maintain the prudent fiscal policies in 2007 that it has taken since 2005, the Ministry of Finance has said.

In contrast to outspreading or austerity fiscal policies, prudent fiscal policies are more moderate and are generally taken when the total supply and demand are balanced but there are some structural imbalances, Ministry spokesman Zhang Tong said.

China saw rising inflation threats, excessive rapid growth of investment in some regions or industries and bottlenecks of coal, electricity, petroleum and transportation supply in 2003.

Since 2005, the Chinese government began to take prudent fiscal policies that are different from the pro-active policies it has taken since 1998 to avoid the overheating of the economy, the spokesman noted.

The prudent fiscal policies of the Chinese government focus on controlling deficit, improving economic structure, promoting reform, increasing revenue and decreasing expenditure, the spokesman was quoted as saying by Xinhua news agency.

The Chinese government began to transfer the direction of the fiscal policies by adjusting the scale of the long-term treasury bonds for development and optimising use of treasury bonds in investing projects.

China's GDP grew by 10.7 per cent in the first three quarters.

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