Ancient Chinese secret:
China Budget Gap Said Set to Widen 50% to $192 Billion
December 27 (Bloomberg) China plans to increase the budget deficit by 50 percent to 1.2 trillion yuan ($192 billion) in 2013, including the sale of 350 billion yuan of bonds to fund local governments, a person familiar with the matter said.
The central government deficit is budgeted at 850 billion yuan, according to the person, who asked not to be identified as the deliberations are not public. The nations leaders target about 8 percent trade growth, down from this years 10 percent goal, the person said.
A bigger fiscal deficit may give Chinas new leadership under Xi Jinping more room for tax cuts and measures to boost urbanization and consumer demand. The 1.2 trillion-yuan total compares with an 800 billion-yuan target this year, which included a 550 billion-yuan central government deficit and 250 billion yuan in local government bond sales.
The year 2013 is the first year for the new Chinese leadership, and urbanization will receive a big push, said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. Financial support, including an expanded fiscal deficit in the budget, is needed for that.
Apart from a trial program launched in late 2011, local governments are barred from selling bonds directly and cant run deficits. China Business News reported the 1.2 trillion yuan figure today and Economic Information Daily reported an 8 percent trade target.
China News Service reported a 10 percent growth target for industrial production in 2013.
The government usually reveals specific goals at the legislatures annual meeting in March.
As the Chinese like to say if a problem can be fixed with more money than it is not a problem .
Meanwhile in America, “Give $100 to reduce national debt, says Texas man”
The link/title above may not arouse your curiosity, but is this some cruel joke, or what? A federal bureau that accepts donations from private citizens to be applied towards paying down public debt? Really?
@Nihat, And America has what kind of education system? No wonder economic policy in the U.S. is so dysfunctional, when the government cynically supports such nonsense.
The following conjecture seems plausible.
Chinese leadership plans to substantially increase standards of life of whole population, now that a much stronger technical production system is operating.
Meanwhile, at the West, the “developed” countries mired in a leadership’s dream of self-organizing coordination drift to stagnation or increased poverty… It does not cross the leadership’s minds that the growth and business opportunities in China were not the result of their dream being proved reality…
tell this to the competitiveness fairy tale economists
In Europe we are constantly reminded by these guys that debt crisis is really a competitiveness crisis because we cannot compete with China and welfare state is unsustainable.
Wow. A government that sets sensible economic goals, works to achieve them and comes up with a consensus. We should send congress to China to study.
@Ryan, You are free to move there.
@Kristjan,
Maybe we should call them ‘backwardians’ since they got pretty much everything backwards.
Like, “Don’t listen to that backwardian he does not know what he is talking about”, “Economy is in trouble because policymakers are listening to backwardian economists”
@PZ, Binary thinkers seem to assume that backwards and forwards are simple reversals. So, it doesn’t much matter to them which comes first and which follows.
“Tax and spend” seems to be a good example of having things reversed. When they are using money, governments have to spend first and then tax. Of course, if they are requisitioning product or labor from the citizenry, then they can collect first and distribute from the grainery or storehouse later. The introduction of money does make a significant difference.
@PZ, Best suggestion all year!
🙂
This article should go to our congressmen with this underlined: “A bigger fiscal deficit may give Chinas new leadership under Xi Jinping more room for tax cuts and measures to boost urbanization and consumer demand.”
@MRW, Won’t help. Congress will need at least a three week primer course to understand why we left the gold standard to which they still cling.
So the chinese are starting down the same nightmare path as the US and the UK before. History just keeps chasing its tail…