China's 2009 Budget Deficit Will Be RMB 950 Billion

    The Finance Ministry has foreseen a deficit of RMB 950 billion in its draft budget for 2009. The figure is a 3.5-fold increase on the RMB 280 billion the Ministry initially proposed, and will account for 3.1 percent of 2008's GDP. If realized, this year's projected deficit will be the highest since the People's Republic was established in 1949. In the past few years, China's fiscal deficit has stayed below one percent of the country's GDP. The 2008 deficit was RMB 111 billion. Even in 1998, when the country was seriously threatened by the Asian financial crisis, the Chinese government still kept its fiscal deficit between RMB 200 billion and RMB 300 billion. The government plans to cover the deficit by issuing treasury bonds. Many investment banks estimate that the Chinese government will issue RMB 1.5 trillion worth of bonds, or possibly even more, in 2009.