China’s Ministry of Finance (MoF) changed the way it accounts for government spending so that the spending deficit for 2010 remains below 3% of GDP, the Wall Street Journal reported. The change, which shifts spending from one year to another, was disclosed in a MoF report. It does not imply a fundamental change in the state of government finances but reflects Beijing’s increasing concern that it maintain an image of strong public finances. The MoF pledged to keep deficits under 3% of GDP, similar to countries in the euro zone, and has been forthright with its criticisms of developed economies’ economic policy. According to calculations by the Wall Street Journal, a strict cash accounting of Chinese government expenditures would yield a 2010 deficit of 3.5%.
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