Raising China's Deficit Cap Would Need to Take Much Into Account, Minister Says(Yicai Global) March 5 -- Increasing the ceiling of China's deficit-to-gross domestic product ratio would require a thorough consideration of many factors such as the economic situation, the need for macro regulation and the state of fiscal revenue and expenditures, according to the vice minister of finance.
The National People's Congress would also need to review any such decision, Xu Hongcai said at a press conference today, adding that there are several other legal procedures involved.
The budget deficit ratio is the ratio of the fiscal deficit to GDP over a period of time. Most countries, including China, generally set the ratio's upper limit at 3 percent based on the Maastricht Treaty. Last year, China's fiscal deficit target was 2.8 percent of GDP.
Fiscal revenue is closely related to economic performance, Xu said. The Chinese economy has huge potential, strong resilience and an unchanged long-term positive trend. It has considerable space for structural adjustment. As the situation improves and the economy recovers, the disparity between fiscal income and expenditure will ease.
The novel coronavirus epidemic is not only threatening people's lives and health but is also having a significant impact on the economy, he added.
The government will work hard to ensure that policies that have been introduced come into play as soon as possible, Xu said. To minimize the impact of the epidemic, the ministry will focus on business sectors and regions affected by the virus and continue to implement targeted temporary measures to optimize spending structures and increase the transfer of funds to local governments.
Long-term measures directed at supply-side structural reform should also be studied in order to promote high-quality economic development, he said. To ensure the fulfilment of full-year economic and social development targets, the ministry will proactively and systematically implement fiscal policies to the last detail to advance epidemic prevention and control as well as economic and social development.
Editor: Kim Taylor
