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China's budget deficit in 2016 to reach 3 pct of GDP: analysis

Xinhua, January 31, 2016 Adjust font size:

China's proactive fiscal policy will continue in 2016 and its general public budget deficit will expand, the China International Capital Corp. (CICC) has said in an analysis note.

CICC analysts expect the deficit this year to reach 2.2 trillion yuan (about 336 billion U.S. dollars), or 3 percent of the country's gross domestic product (GDP).

The note came after a national fiscal work conference statement said last month that China would increase its budget deficit in 2016, gradually raise its fiscal deficit ratio.

In an effort to shore up growth, China raised its deficit-to-GDP ratio to 2.3 percent for 2015 from 2.1 percent in 2014.

A 3-percent deficit ratio is normally considered a red line not to be crossed, but opinions favor a higher ratio as it enables the government to cut taxes, encouraging more production. Endi