China’s budget deficit could exceed $390 billion in 2016

Almaty. March 2. Silkroadnews - At the end of this year China’s budget deficit could exceed 2.6 trillion yuan ($396 billion), which is equivalent to 4% of GDP, TASS agency writes.
“In the near future, it’s possible to raise China’s fiscal deficit rate to 4 percent,” – Sheng
Songcheng, director of the Statistics Department at the People’s Bank of China (Central Bank) said.
According to him, this is due to an increase in government spending on reforms and measures undertaken to maintain the stable economic growth.
A similar view is held by Pan Guojun, researcher at the Department of Macroeconomic Research under the State Council of China, who said: “This year’s budget deficit will amount to 2.17 trillion yuan ($331 billion).”
As Director of the Institute for Financial Research at the Chinese Academy of Social Sciences Gao Peiyong said earlier, during the implementation of the 13th Five-Year Plan (2016-2020) the budget deficit will only grow.
“Now there is a tax system reform being carried out, thus, it will be quite hard to avoid falling of the revenues to the treasury,” - he said.
“The reforms are also carried out in other sectors of the economy, that will result in further increase in the load on the budget,” - said the economist.
Among the reasons for the state revenues reduction he pointed out to a slowdown in GDP growth.
“As long as the economic growth slowdowns there is a reduction in the budget revenue inflow. In 2011 growth of budget revenue made 24.8%, in 2015 it slowed to 8.4%,”- said Gao Peiyong. According to his calculations, in 2016 China’s GDP growth will amount to 6.8%.
The Chairman of the National Development and Reform Commission of the People’s Republic of China Xu Shaoshi earlier said that following the results of 2016 China’s GDP growth is forecasted at 6.5-7% level. At the same time, he acknowledged the country’s economy is “under downward pressure”.
According to the National Bureau of Statistics of China, China’s GDP growth rate reached 6.9% in 2015, which is the lowest number since 1990. Thus, the past year has not become an exception to the general trend in the Chinese economic growth slowdown. In 2010 GDP growth made 10.4%, in 2011 - 9.2%, and in 2012 - 7.8%. At the year-end 2013 the index slowed to 7.7%, followed by 7.4% in 2014.