China budget deficit heads for record

China is aiming for 7 percent plus economic growth this year.

By Staff and wire reports

HONG KONG, China -- China unveiled a record deficit when its 2001 budget was presented to the ninth National People's Congress in Beijing Tuesday.

Chinese Finance Minister Xiang Huaicheng said he expected spending on social security, defense and pump-priming of the economy would lift the total deficit to about 260 billion yuan ($31 billion).

He said this would be a rise of 4 percent on last year's deficit of $29 billion. "The financial work this year is arduous," Xiang said, urging legislators to "work hard with great confidence to ensure the successful implementation of the budget for this year."

The central and local governments will continue their aggressive economic pump-priming. They will spend a combined 1.74 trillion yuan in 2001, while raising about 1.48 trillion yuan in taxes and other revenues. The NPC is the country's parliament. It is meeting from March 5-15 for its fourth session of the ninth congress.

The NPC is charged with adopting laws, electing government leaders and approving the budget, but rarely, if ever, rejects proposals.

Lawmakers this week will vote on China's economic and development blueprint for 2001-05. The blueprint, known as the 10th Five-Year Plan, includes a strategy to develop the poorer western regions, restructure the economy and speed up market reforms.

Growth expected to slow this year

China has recorded economic growth of between 7 and 8 percent for much of the last decade. But with growth expected to slow this year, China needs to keep the economy moving with massive state spending to create jobs for millions of unemployed.

In particular, slowing growth in rural incomes and the flagging agricultural sector have raised concerns.

In the welfare area, a comprehensive social security system is needed to manage the retired, jobless and sick now cared for by their companies.

China is ready to bring reforms to the ailing state sector to a new level by encouraging stock listings and more diversified ownership. Lawmakers will likely endorse expanding the role of the fledgling private sector to power the economy and create new jobs.

Readying for World Trade Organization entry

Chinese premier Zhu Rongji said on Monday in his opening address to the NPC that entry to the WTO would bring China "a number of new problems".

Another big issue is corruption. At last year's congress, 29 percent of delegates voted against or abstained from a work report on the government's anti-graft campaign, sending a clear signal that they were unimpressed with Beijing's efforts to crack down on corruption.

China's deficit of about 2.7 percent of expected gross domestic product in 2001 is still relatively conservative by global standards.

Reuters contributed to this report.

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