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Govt to outline 2011 fiscal deficit target

12-21-2010 11:39 BJT

China is planning to outline a fiscal deficit of 900 billion yuan ($135 billion) for next year, 150 billion yuan less than this year's target, according to a report in the Beijing-based Century Weekly Magazine on Monday.

The central government's fiscal deficit will decrease to 700 billion, while debt issued by central authorities for local governments will be maintained at 200 billion yuan, the magazine cited an anonymous source close to the Ministry of Finance as saying.

The magazine said that before the plan is passed at the annual national legislative session in March, the government might fine-tune the numbers in accordance with changes in the domestic economic situation and the level of recovery of major world economies.

Liu Yuanchun, associate dean of the Economics School at Renmin University of China, told China Daily that if GDP grows at a rate above 9 percent, the 900 billion yuan deficit will be no larger than 2 percent of GDP.

"Judging by the current situation, the probability of a GDP growth rate below 9 percent is very small, which means the deficit is likely to be less than 2 percent of GDP," he said.

In March, the nation's leaders outlined an "appropriate" deficit of 1.05 trillion yuan for this year, roughly 2.8 percent of GDP, and an increase of about 100 billion yuan from last year.

The total deficit consists of 850 billion yuan in central government deficit, and 200 billion yuan in local government bonds, which will be included in local government budgets.

China's fiscal deficit hit 950 billion yuan in 2009, a six-year high, but was still less than 3 percent of GDP, considered by many economists as a security line.

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