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Bond boost for stimulus plan

CHINA will continue to issue regional government bonds and corporate bonds to finance the national stimulus package, which has been going "smoothly" so far, officials in Beijing said yesterday.

In addition, the country will strengthen its efforts to accelerate tax reform, increase salaries for low-income households and optimize the government's fiscal spending to help bolster domestic demand, which is key to the economy, officials said.

"It has been smooth so far for China to carry out its active fiscal policy and implement the massive stimulus measures," Vice Finance Minister Zhang Shaochun said in a press conference.

China's taxpayers have enjoyed tax reductions of 120 billion yuan (US$17.65 billion) in the first quarter, as the country offered cuts to stimulate the slowing economy, Zhang said.

Between this year and next year, China aims to dish out a 4 trillion yuan stimulus package to help counter the effects of the global financial crisis. The central government will fund 1.18 trillion yuan of the package, the rest coming from regional governments and companies.

By the end of last month, the central government had already allocated 392.4 billion yuan from the package, making up 33.3 percent of its 1.18 trillion yuan budget, to fund infrastructure construction, basic housing in rural areas, education, environmental protection and innovation.

The rest of the money in the stimulus package should come from regional governments and investment from companies. To help them collect capital, China this year allowed local governments and companies to issue bonds.

China plans to put on sale a total of 200 billion yuan of regional government bonds. By the end of last month, China had already sold 88 billion yuan of these bonds.

Meanwhile, the country has collected 137.8 billion yuan from the issuance of corporate bonds so far this year.

"We will continue to support regional governments and companies to issue bonds, along with the measures to boost domestic demand, including tax reduction, income increases and better government spending," Zhang said.


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