In his annual speech to China’s National People’s Congress Premier Wen Jiabao said he was confident that China could reach its 8 percent GDP growth target this year. This indicates that China will not announce a new stimulus package beyond the 4 trillion yuan ($585 billion) package from November last year, at least for the time being. Rumors about a new economic stimulus package to be announced in China have spurred stock markets worldwide. While Wen did not mention any additional stimulus packages in his report he listed a range of budget increases for various sectors. Agriculture, education, social security and public security spending in particular will see the significant increases in the new budget plan, with the latter being of considerable importance for the government given the millions of migrant workers and college graduates unable to find employment. The announced budget increases together with tax cuts will bring China’s budget deficit to 950 billion yuan in 2009, nearly 3 percent of its GDP.
In his report about the government to the National People’s Congress in Beijing today Premier Wen Jiabao listed the major targets for 2009 and announced budget increases for a wide range of sectors and industry. While no new stimulus package was announced in his speech China’s budget deficit for 2009 is set to reach 950 billion yuan, from 111 billion yuan in 2008.
China’s Ministry of Finance will issue 200 billion yuan ($29 billion) of bonds on behalf of local governments, according to Premier Wen Jiabao. The bonds, which fall under provincial budget supervision and are organized by the Ministry of Finance, are part of the government’s 4 trillion yuan stimulus package.
As the traditional highlight of his annual report to the National People’s Congress Premier Wen Jiabao expressed China’s interest in a peace agreement with Taiwan. While Beijing’s and Taipei’s stances on the political situation and on Taiwan’s independence remain entirely incompatible Wen continued with his remarks China’s friendlier and more pragmatic stance on cross-strait relations.
Hit severely by the drop in global demand, Chinese manufacturers called for a Yuan depreciation. A weaker Yuan would lower the price of Chinese exports. China already faces strong skepticism about its currency policy from the U.S. and other nations for halting the Yuan’s appreciation over the last eight month to support exporters. Since ending the Yuan’s fixed exchange rate in 2005 China’s currency has climbed 21 percent.
China’s Premier Wen Jiabao addressed numerous demands for more information about the government’s stimulus package and pledged to increase transparency of government spending. Millions of internet users have urged authorities for more information about budget and stimulus spending to prevent corruption and misuse of funds.
