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China's budget deficit to reach $336 billion, 3% of GDP

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Staff writer ▼ | February 1, 2016
China's proactive fiscal policy will continue in 2016 and its general public budget deficit will expand, the China International Capital Corp. (CICC) said in an analysis note.
Beijing street
Asian economy   China would increase its budget deficit in 2016
CICC analysts expect the deficit this year to reach 2.2 trillion yuan ($336 billion), or 3 percent of the country's gross domestic product (GDP).

The note came after a national fiscal work conference statement said last month that China would increase its budget deficit in 2016, gradually raise its fiscal deficit ratio.

In an effort to shore up growth, China raised its deficit-to-GDP ratio to 2.3 percent for 2015 from 2.1 percent in 2014.

A 3-percent deficit ratio is normally considered a red line not to be crossed, but opinions favor a higher ratio as it enables the government to cut taxes, encouraging more production.