MNI Policy: China Sees Moderate Deficit Increase Sufficient

     BEIJING (MNI) - China's Minister of Finance said a 0.2 percentage-point

increase in this year's budget deficit is sufficient to engage countercyclical

adjustment to counter slowing growth and account for reduced tax revenue. 

     The target deficit ratio this year is raised to 2.8% of the GDP from 2.6%

last year, Premier Li Keqiang said this week. Some observers had previously

argued for the ratio to exceed 3% to support growth.  

     With profits from large institutes and enterprises, reducing normal

expenditure and focusing on targeted spending areas, the government is able to

do away with sharply increasing the deficit, Minister Liu Kun said at a press

conference during the National People's Congress.

     The government also kept the deficit size conservative to leave room for

future adjustment if needed, Liu said.  

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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