China’s finance minister, Xiang Huaicheng, said he expected a “bloated” budget deficit in 2002 as the government continues its policy of heavy state spending to stimulate economic growth and meet rising welfare costs caused by higher unemployment and rising pension obligations. While he gave no detailed figures, Xiang said that the total amount of debt would be “within a safe range compared with the size of the economy”.
According to official measures, China’s budget deficit amounts to only 3 per cent of gross domestic product while domestic debt is 15 per cent of GDP. However, Song Guoqing, a Beijing university economics professor quoted by the Financial Times, said that the true level of domestic debt was about 70 per cent of GDP, taking into account the nonperforming loans of state banks, unfunded state pensions, unemployment obligations and other contingent liabilities.
Last year, China’s budget deficit stood at Yn247.3bn, within the target set at the National People’s Congress in March.