Monday, January 5, 2009

China's finances:- Face tough 2009 -minister

The year ahead will be difficult for China's fiscal picture as revenues fall and spending surges, the country's Minister of Finance Xie Xuren said on state television. Xie said an abrupt economic slowdown and shrinking corporate profits as well as tax cuts had contributed to a drop in revenues, just as the government has pledged to ramp up spending to support domestic demand.
The problem of unbalanced income and expenditures will be prominent in 2009,' Xie said at a government conference. China has declared that it will implement a 'proactive fiscal policy,' its code for expansionary spending, with the central government already pledging to usher in a stimulus package totalling 4 trillion yuan $585.7 billion. Faltering corporate earnings have started to whittle away at government revenues.

Fiscal revenues declined 3.1 percent in November from a year ago, a sharp reversal from strong gains made earlier in 2008. Xie said China's whole-year fiscal revenue in 2008 would be above 6 trillion yuan, implying an increase of at least 17 percent over 2007. State radio cited Xie as saying that China would continue to cut corporate and personal taxes in 2009, and that it wwould increase tax rebates for exporters, especially those in labour-intensive sectors.

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