Finance Minister denies 300b yuan govt spending of public funds

China's Minister of Finance Lou Jiwei (second of left) takes questions from journalists at a news conference during the ongoing two sessions in Beijing, March 6, 2015. [Wang Jing / chinadaily.com.cn]

Local government debt

The risk of China's local government debt is generally controllable, Lou said.

"China's local government debt problem is a fact," Lou said, "the government is guarding against regional financial risks."

"On the whole," he said, "the risk of China's local government debt is controllable."

Tax reform

Government's plan to transform business tax to value-added tax will expand to immovable property in 2015, although calculating the tax rate is difficult, Lou said. The taxpayer will benefit from the step.

Hong Kong and yuan-dominated treasuary bonds

China will continue to issue yuan-denominated treasury bonds in Hong Kong Special Administrative Region, Lou said. 

Hong Kong has been given the unique position in floating yuan-denominated treasury bonds, because the majority of offshore renminbi is traded in Hong Kong and it is China's territory, he stressed.

Tax Preference policies under "new normal"

It is part of reform to increase tax preference policies, especially regional tax preference policies, said Lou. "There will be no new policies added, we will focus on putting the old policies in order and maintain a fair competition based on the market."

According to Lou, not only China's economy is entering the new normal, the global economy is entering the new normal as well. "It is a de-leveraging process ever since the global economic crisis in 2008, different countries are undertaking the effect differently," said Lou. Under an unclear momentum of global economic recovery, China needs to face the downward pressure and adopt a moderate expansion policy, added Lou.

Data and background

Central government spending this year is expected to total 2.5 trillion yuan, up 10.4 percent, to which a further 27.9 billion yuan ($4.46 billion) is to be added in funds carried over from previous years, according to a report released by Ministry of Finance on Friday.

Major progress has been made in reforming the fiscal and tax systems, said the report. In 2014, the ministry worked to ensure that constraints on budgets were tightened, fiscal and budgetary management was made more standardized, further improvements were made to the system for managing government debt and financial discipline was strengthened.

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