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Wednesday, 6 March, 2002, 08:08 GMT
China spends to avoid recession
Three delegates catch up on sleep at China's annual parliament session
Parliamentary sessions have proved tough going for delegates
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By Rupert Wingfield-Hayes
BBC Beijing correspondent
China says it will dramatically increase government borrowing and public spending this year as it attempts to spend its way out of the world economic slowdown.

Speaking to China's annual session of parliament on Wednesday, the country's finance minister said the government's budget deficit for the 2002 financial year would balloon to nearly $40bn.

With demand from its main export markets in America and Europe decreasing, China has little choice but to try and spend its way to continued economic growth - hence what China's finance minister is proposing.

The $40bn will be China's biggest ever budget deficit.

Tough challenges

Much of the money will be poured into large infrastructure projects in the hope of boosting economic growth and soaking up unemployment.

Chinese President Jiang Zemin rubs his eyes after a long day in parliament
WTO membership has opened China up to tough foreign economic competition

There will also be a 28% increase in spending on social welfare to help the millions of workers laid off from China's ailing state industries and a 18% rise in the military budget.

China's economy is facing particularly tough challenges this year.

The government says it needs the economy to keep growing at about 7%.

In the past, such growth has been driven by exports.

WTO entrance

But export growth is now slowing, and at the same time, China's entry into the World Trade Organisation is forcing it to open its own markets to foreign competition.

WTO membership is hurting government revenues as well.

China is being forced to slash high import tariffs that once made up a major part of its government finances.

See also:

22 Feb 02 | Asia-Pacific
Bush preaches democracy to China
21 Feb 02 | Asia-Pacific
China's heir apparent to visit US
21 Feb 02 | Business
China cuts interest rates
17 Sep 01 | Business
China enters WTO fold
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