October 08, 2008

Chinese economic growth yields fiscal windfall

According to a report by the state council to the top legislature in Beijing, strong economic growth means that fiscal revenues for 2007 will far exceed forecasts made at the beginning of the year. Chinese government fiscal revenue is expected to total CNY 2.84 trillion or CNY 401.1 billion above the budget forecast.

Statistics from Chinese ministry of finance showed that in January to November 2007, central government fiscal revenue was CNY 2.68 trillion up by 37% YoY over the same period last year,.

According to the sate council, the extra fiscal revenue will be used to improve people's livelihood with education, health care, social security to top the agenda. Chinese government will use CNY 40 billion to subsidize farmers to raise fine breeds of livestock and plant improved variety of crops and to renovate agriculture infrastructure such as roads, bridges and reservoirs.

The report said that Chinese government will give CNY 21 billion to subsidize the compulsory education, CNY 40 billion to social security, CNY 31.8 billion to medical care, CNY 29 billion to scientific and technological development and CNY 1.1 billion for cultural causes.

The central government will use the extra revenue to offset fiscal deficit by CNY 45 billion and keep the deficit of this year at CNY 200 billion. The state council required the local governments to focus the use of their 300 billion extra revenue on improving people's livelihood too.