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Weekly Comment icon imageChina continued to have room to increase government spending to prop up the economy, but it was unclear just how much, the country’s finance minister said on Monday. Speaking at a news conference during the annual session of China’s parliament, finance minister Lou Jiwei said fiscal income would slow in future, but China continued to have margin to raise its level of government debt.

Nevertheless, it was not clear just how much room authorities had available to do so and fiscal revenues were in a “severe situation” Lou said.

“Our fiscal income is in a severe situation. We need to expand the fiscal deficit, but it is hard to say how much room is appropriate,” Lou added.

“We have some room, but cannot increase too much,” he added, pointing out how China’s fiscal income was only equivalent to about 30% of GDP, “which is relatively low compared with other countries and far lower than that in developed countries.”

China budgeted a 2016 government spending deficit worth 3% of GDP, up from 2.4% in 2015, below what some analysts had expected.

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[Source: - Author: Alexander Bueso - Dated: March 7, 2016]


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