Fiscal caution as focus put on budget balance

Greater prudence in spending and a better budget balance are the goals set by newly appointed cabinet officials at a major economic conference on Sunday.

Despite rapid revenue growth, the budget deficit will, as planned, reach 1.2 trillion yuan ($193.2 billion) in 2013. This marks a 50 percent increase from the previous year.

Vice-Premier Zhang Gaoli, addressing the China Development Forum, said the key was to spend wisely and not just let the government expand its share of the national coffers.

Finance Minister Lou Jiwei said that China would regain budgetary balance in a few years — as external conditions improve and the government's domestic expenditures are better regulated.

"We should establish a strong and balanced fiscal system, but our deficit level is relatively large at the moment," Lou said.

He did not give a timetable for cutting the deficit. Nor did he specify how much of a deficit, if any, would be tolerated.

But the message was important, observers said, as this was the first public speech by Lou since he assumed office.

China's planned deficit level for 2013 is equal to 2 percent of GDP.

From a total of 1.2 trillion yuan, 350 billion yuan will be raised via issuance of local government debt. Lou explained the rise in the deficit was an answer to the negative global business environment, and also as a result of the rapid expansion of domestic public spending.

Public expenditure jumped 15.7 percent year-on-year in the first two months, more than double the rate of the 7.2 percent increase in government income, which is predicted to expand in the single digits in the foreseeable future.

Premier Li Keqiang vowed to cut spending, although he also said the government cannot renege on its commitment to improve general well-being over the long run.

Vice-Premier Zhang said fiscal expenditure will not be used on redundant projects and overcapacity.