China's financial pressure is not terrible

China's financial pressure is not terrible

China's budget deficit in 2009 the size of 950 billion yuan, a record high. Operation from the budgetary point of view, 1-May cumulative and national financial expenditure 2.249698 trillion yuan, an increase of 488.717 billion yuan over the same period last year, an increase of 27.8%. National 2710.867 billion yuan of fiscal revenue, more than 195.57 billion yuan last year, down 6.7%. Revenue and expenditure pattern that is parallel to the incremental reduction in the new implementation of the proactive fiscal policy performance. However, the rate of decline in fiscal revenue exceeded expectations. Budget provided for the growth rate of fiscal revenue, not only did not complete, but negative growth. Increase in fiscal expenditure, income decline, China's fiscal and taxation reform in 1994 is facing the most serious challenge since. However, rarely seen in the past fifteen years the financial pressure is not terrible. Gradually as the economy has stabilized, fiscal revenue has already begun in May turned up, fiscal revenue is likely to show "before the low-high" trend. Even if the actual growth in revenue than the budget, issues of government bonds is still a viable option. A lot of people are worried about issues of government bonds will affect the financial sustainability. The unprecedented budget deficit of 950 billion yuan, on this basis to expand the size of the deficit and then, worried that it is normal. However, the reality of China decided that this worry is unnecessary. Revenue in previous years, a faster growth rate in response to short-term financial pressures have laid a sound foundation. 2009, in accordance with the assumption that GDP growth rate of 8 percent, accounting for 950 billion yuan of the budget deficit to GDP ratio of 2.93%. If only a central government deficit of 750 billion yuan, the deficit ratio of GDP accounted for only 2.31%. The end of 2009 the balance of 6.270835 trillion yuan of treasury bonds, treasury balance the proportion of GDP accounted for only 19.31%. 2009 is the year, our budget situation can not be viewed in accordance with the normal year. International Monetary Fund, most economists forecast the GDP in ten countries the ratio of public debt accounted for in 2007 from 78% to 114% in 2014. U.S. budget deficit in 2008 the proportion of GDP accounted for 3.2% in 2009 rose to 13.1 percent jump. In contrast, the financial pressure on China is still small. Of course, we can not ignore the financial pressure. If the widening gap in financial revenue and expenditure, the fiscal deficit expanded, then the proportion of GDP the budget deficit accounted for more than 3% may be understood this is usually the size of the warning level of debt. There is a view that China has a large number of statistical data is usually not covered by debt, including a variety of indirect liability, contingent liabilities and hidden liabilities, the financial pressure on China than the big imagination. However, this is still not a problem. With regard to the size of the debt is estimated that mixed high and low. According to the highest of 4.1 trillion yuan, the bond balance of the proportion of GDP accounted for only 32%. Moreover, the debt will be less than some of the spending pressure on the formation of the future, after some two to three decades will have to wait until the formation of financial pressure. 2009, China's GDP accounted for the balance of public debt ratio is still at a relatively low level, In any case it is difficult to cross the 60% of the so-called cordon. Even so, even if more than 3% and 60% of the so-called security line, in China, it does not become a problem. Rate of 3% deficit and the debt burden of the rate of 60% of the euro-zone countries in order to maintain the stability of the euro and the product of bargaining, is the result of political compromise. These indicators only have a certain reference value. Smooth as long as the bond issue, there is no problem of debt default, then the risk of such a debt is affordable, financial sustainability is guaranteed. China is a high savings rate of the country, has over 20 trillion yuan savings deposits of urban and rural residents, together with the enterprise savings bonds provided for additional funding base. Of particular note is that China and most countries of the world not the same. Consider all possible liabilities, taking into account the needs of the Chinese government of all the various assets. China in transition still has a large number of state-owned resources, the state-owned land and assets of state-owned enterprises. These are the real state-owned assets. There is no doubt that these assets can resist financial risks for the Government to provide more adequate protection. Moreover, there is always the economic cycle. Addressed the issue of bonds at a low economic period, the problem of insufficient revenue. Once the economy improves, will be a steady increase in financial revenue, financial pressures will eventually be resolved. 2009-6-29