China will try to reduce the fiscal deficit next year, Finance Minister Jin Renqing told a national working conference yesterday, sending a clear signal that the government wants to avoid a growth pattern based on increased spending.

Jin did not disclose details of next year's budget but said government spending in 2007 would comply with the guidelines mapped out at the Central Economic Work Conference earlier this month.

The conference called for perseverance in structural adjustments and balanced economic and social development.

"The bulk of new government investment next year will target rural areas," Jin said.

The fiscal deficit is budgeted at 295 billion yuan (US$37.8 billion) this year, slightly down from 300 billion yuan (US$38.5 billion) in 2005.

The plan to slash the deficit is backed by the country's strong financial position. Jin said total fiscal revenues for 2006 are expected to top 3.9 trillion yuan (US$500 billion), up from 3.2 trillion (US$410 billion) in 2005.

The key points made by Jin were as follows:

Social services, particularly in rural areas, will be prioritized. They include education, medical care and social security.

After a pilot scheme across western provinces, free education will be provided for all 150 million rural children for their nine-year compulsory education.

More rural people will be brought under the umbrella of the experimental cooperative health care system.

The system, jointly funded by the government and individuals, is now being tested in around half of the country's rural areas. Next year, it will be expanded to cover 80 per cent of the rural population.

The government's per-person input will be doubled, rising from 10 yuan (US$1.3) to 20 (US$2.6).

The government will fund trials of a basic subsistence system for low-income people in the countryside.

(China Daily December 20, 2006)