China strives to ensure funds to boost economy are used correctly
China yesterday pledged the first fund of 100 billion yuan in its 4-trillion-yuan (US$586 billion) economy stimulus package will be distributed in the fourth quarter of this year.
The country will also strive to guarantee funds allocated to stimulate the economy will be wisely used so that they meet the expectations of tax payers, said Mu Hong, vice chairman of the National Development and Reform Commission, yesterday.
He said the central government has drafted rules over spending of the funds, and projects which consume huge amounts of energy and construction of government office buildings will be strictly forbidden.
China on Sunday announced the 4-trillion-yuan stimulus package over the next two years to bolster the domestic economy. Mu said the central government will allocate 1.18 trillion yuan to the package, with the remaining portion coming from state-owned enterprises, local governments and bank loans.
The 100 billion yuan will be used in six areas: 34 billion yuan in improving infrastructure construction in rural areas 25 billion yuan in expanding nationwide transport network 13 billion yuan for better health-care and education services 12 billion yuan to fight pollution and for energy conservation 10 billion yuan for low-cost housing and 6 billion yuan for innovation, according to Mu at a press conference in Beijing.
“We estimate the 100-billion-yuan fund, together with the capital spent in reconstruction projects in the earthquake-stricken areas, will accelerate the pace of investment growth and create economic output of 400 billion yuan,” said Mu.
He did not deny the challenges China faces in preventing its gross domestic product from slowing too abruptly but stressed the world’s fourth-biggest economy still has healthy economic fundamentals.
“The slower growth in the economic data in October shows the influence of the global financial crisis on China and the tighter policies in the first half. But the overall situation is good as China still achieved a 9.9-percent increase in GDP growth in the first three quarters when many other countries reported negative results,” said Mu.
China’s industrial production growth cooled to a seven-year low of 8.2 percent last month. The rise in exports and imports dropped dramatically to below 20 percent and fixed-asset investment also slowed from previous months.
If the slowdown accelerated, it would severely damage China’s productivity, said Mu. “It is why the Chinese government decided to make major shifts in macro-economic policies and launched the 10 stimulus measures.”
But Mu said he was “very confident” that China would see through the crisis, as it recovered from the severe disasters that hit the country this year. With a population of 1.3 billion people, China had strong potential to boost investment and consumption, Mu said. “Boosting domestic demand has become the priority of economic work,” Mu said.
Tags: economy, Financial, Fund