China´s budget earmarks more money for rural areas 03-06-2004 19:21

The Chinese government will give top priority to agriculture, rural area and farmers in terms of expenditure in the central budget for this year. This was the message delivered by Finance Minister Jin Renqing in his report to the ongoing NPC session this morning.

Total expenditure will increase by more than 30 billion yuan, or 20%, over that of last year to address the problems facing agriculture, rural areas and farmers. 10 billion yuan from the grain risk fund will be given in direct subsidies to farmers.

At the same time, the overall tax rate will be reduced by over 1 percentage point, reducing the burden on farmers by as much as 11.8 billion yuan. Agricultural taxes will be rescinded in five years.

This marks a major policy shift from government investment, which once went mostly to public infrastructure.

Jin Rrenqing, Minister of Finance, said, "In 2004, 95.5 billion yuan will be earmarked for education, health care, science and technology, and culture. That represents an increase of 10 billion yuan over the previous year. The greater part of the money will be used for rural areas."

This financial policy shift towards the disadvantaged rural areas is in line with Premier Wen Jiabao's call for more balanced development. Many NPC deputies applauded the change.

NPC Deputy Hao Ruyu said, "China is now in a very special period of history. The GDP average income per capita is over 1000 US dollars. This can cause instability and a gap between incomes. Minimizing the gap between the rich and poor with financial policies is crucial to the sustainable economic development."

Jobs and social security are also highlighted in this year's budget. The government plans to increase reemployment assistance funds by 3.6 billion yuan, over 76 percent more than last year.

About 78 billion yuan will be allocated to guarantee the living allowances for laid-off workers, retirees and low-income urban residents.

A total of 17 billion yuan will be allocated in subsidies for the restructuring of state-owned enterprises that close down or go bankrupt. The three provinces in northeast China are the major beneficiaries.

NPC Deputy Liu Cunzhou said, "This year's budget report gives great support to the revitalization of the country's Northeast. The tax policy and budget for state-own enterprises especially help a lot. I believe with the financial support of the central government, the prosperity of the Northeast is foreseeable."

The report also underlines expenditure management and reform of the taxation system.

NPC Deputy Liu Peiqiong said, "In the future China will have a more consolidated taxation system. As that income tax will become the major tax and very added taxes will be levied on consumption rather than production."

The finance minister also proposes a 11.6 percent increase in the defense budget. That's more than 21 billion yuan, bringing it to about 207 billion yuan.

The report for 2004 projects central government expenditures of more than 1.7 trillion yuan, and revenues of more than 1.38 trillion yuan. This is to keep the deficit at 319 billion yuan, near last year's level.

Financial experts say 2004 will not be an easy year. With several tax-cut policies and more financial assistance to the needy, the country faces a great challenge keeping the deficit at last year's level.


Proposed 2004 Gov't Budget at NPC Session

1. Investment in rural areas

-30 billion yuan, up 20%

Direct subsidies for farmers

-10 billion yuan

2. Tax-cut policy for farmers

-Overall tax rate reduced by over 1 percent a year

-Agricultural taxes rescinded in five years

3. Expenditure for jobs & social security

-Increase reemployment assistance funds by 3.6 billion yuan, up 76%

-78 billion yuan in allowances for laid-off workers, retirees and low-income urban residents.

-17 billion yuan subsidies for state-owned enterprises

4. Defense budget

-207 billion yuan, up 11.6%

5. Projected central expenditure in 2004 - 1.7017 trillion yuan

Projected central revenue - 1.3819 trillion yuan

Projected central deficit - 319.8 billion yuan


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