(Yicai) March 6 -- China has brought down the ceiling of the deficit-to-gross domestic product ratio to 3 percent this year from last year’s all-time high of 3.8 percent, but national public expenditure will still climb, an official from the country’s cabinet said on the release of the government’s work report yesterday.

The country will follow moderately stronger fiscal policy this year given other policy tools such as local government special bonds, said Huang Shouhong, director of the State Council’s research office.

Even though the deficit cap, which is the spending in excess of revenue, is lower than last year, the budgeted deficit will still swell CNY180 billion (USD23 billion) to CNY4 trillion (USD564 billion) as the GDP rises, Huang said.

National public expenditure will increase CNY1.1 trillion year on year to CNY28.5 trillion. And local government special bonds will advance by CNY100 billion to CNY3.9 trillion.

The country has kept the budget deficit ratio at a reasonable level in recent years, Huang said. Last year the deficit cap was also set at 3 percent but this was then lifted to 3.8 percent in the fourth quarter after the government issued an additional CNY1 trillion (USD139 billion) of government debt to fund post-disaster reconstruction, he added.

In 2020 the ceiling was lifted above 3 percent at 3.7 percent and in 2021 it was set at 3.2 percent as the country increased fiscal spending to cope with the economic fallout from the Covid-19 pandemic. This then dropped back to 2.8 percent in 2022.

China will also issue CNY1 trillion of ultra-long-term special government bonds this year to implement major national strategies and build security capabilities in key areas.

Editor: Kim Taylor