China is considering withdrawing its proactive fiscal policy, said Wang Jun, vice minister of finance, during the 2010 China Development Forum in Beijing today.
"China's proactive fiscal policy was formulated according to the country's own situation, and the withdrawal will take place step by step in accordance with the country's conditions to ensure a stable transition," Wang made the remarks while delivering a speech at the forum.
The government announced a $586-billion stimulus package in late 2008, which was designed to roll out in 2009 and this year.
With China's GDP growth reaching 8.7 percent year-on-year and new yuan loans amounting to 9.6 trillion yuan ($1.4 trillion) in 2009, investors are concerned the government may halt stimulus measures to avoid rising inflation and asset bubbles - especially in the wake of the two reserve requirement hikes this year.
China's transfer payments so far this year amounted to 3.06 trillion yuan, a year-on-year increase of seven percent. At present, the revenue ratio between the central and local governments is 53 yuan to 47 yuan (based on the benchmark of 100 yuan), while the expenditure ratio between the two is 23 yuan to 77 yuan.