Page last updated at 15:03 GMT, Monday, 2 February 2009

Chinese spending creates deficit

Premier Wen Jiabao
Prime Minister Wen Jiabao said China may spend more to boost the economy

China has reported a budget deficit of 111bn yuan ($16.2bn;11.5bn) in 2008 after a big increase in government spending to boost the economy.

An increase in revenue of 19.5% was offset by a 25.4% rise in spending, compared with the previous year.

The Ministry of Finance said the jump in spending was largely due to relief funds needed to cope with the Sichuan earthquake in May 2008.

China also spent billions of dollars on a stimulus package in November.


The government pledged almost $600bn to invest in housing, infrastructure and post-earthquake reconstruction over the next two years in order to kick-start the country's slowing economy.

And there may be more money on the way.

Chinese Prime Minister Wen Jiaboa has said that his government may take further measures to boost economic activity.

After experiencing years of double digit growth, China's economy grew by 9% in 2008, but only by 6.8% in the final quarter of the year.

Speaking at the World Economic Forum in Davos, Switzerland last week, Mr Wen blamed other countries for the problems hitting his own economy.

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