BEIJING (Reuters) - China said it would boost fiscal spending in 2013 in a bid to deliver economic growth of 7.5 percent for the year, outgoing Premier Wen Jiabao said on Tuesday in remarks prepared for the opening of the country’s annual parliament meetings.
Wen said China targeted a 2013 fiscal deficit of 1.2 trillion yuan (127.4 billion pounds), or around 2.0 percent of gross domestic product, up from the 850 billion yuan deficit chalked up in 2012 that was worth 1.6 percent of GDP.
That increased spending and a rush of approvals worth around $150 billion (99.1 billion pounds) for key infrastructure projects in the second half of 2012 helped cushion a slowdown in growth to a 13-year low of 7.8 percent in 2012 - just over the 7.5 percent official target set in March a year ago.
Railway spending has been key to that boost and China said it would put into operation 5,200 km (3,225 miles) of new railway lines this year, according to a separate document issued by the National Development and Reform Commission (NDRC).
In a separate document, the Ministry of Finance said it was raising the quota for bonds issued by local governments to 350 billion yuan in 2013, compared with 250 billion yuan in 2012.
It also pledged to further strengthen regulation of local government debt and curb irregular financing activities.
China’s local governments have been dogged by debt worries since racking up 10.7 trillion yuan of loans by the end of 2010. They borrowed heavily to finance their contributions to infrastructure spending laid out in a 2008 stimulus programme launched by Beijing in the face of the global financial crisis.
“China will appropriately increase the scale of the fiscal deficit and government bond issuance to guarantee spending plans,” the document said.
The finance ministry said it would also expand its pilot programme to replace business tax with a value added tax.
In a broad series of increased spending commitments, China said it would raise military spending by 10.7 percent this year to 740.6 billion yuan, building on a nearly unbroken series of double-digit rises in the defence budget over two decades.
The government also announced that the domestic security budget would rise 8.7 percent to 769.1 billion yuan, the third year in a row it will outstrip defence spending.
And with popular discontent brewing across the country in the face of worsening pollution, the NDRC document said China would actively develop clean energy sources and boost hydropower, nuclear and wind generation capacity by a total of 42.24 million kilowatts in 2013.
Reporting by Kevin Yao and Aileen Wang; Writing by Nick Edwards; Editing by Raju Gopalakrishnan