He pledged that his ministry would nevertheless continue with its proactive fiscal policy and would strive to control the budget better and scrutinize preferential tax policies more closely.

Xiang gave a report on the final accounts of last year's central revenue and expenditure to the on going 28th session of the Ninth National People's Congress Standing Committee, China's top legislative body.

He said that January-May revenue hit 706.131 billion yuan (US$85.4 billion), an increase of 59.873 billion yuan (US$7.2 billion) or 9.3 per cent over the same period last year. State expenditure totaled 633.439 billion yuan (US$76.6 billion) in the first five months of this year.

National revenue grew 28.9 per cent in the first five months of last year. Xiang said this year's slow growth rate was caused by factors such as domestic enterprises' lower profits, increased drawback payments paid to exporters, cuts in tariffs, stamp duty for stock exchanges and in business tax for the financial and insurance industry, as well as the suspension of the State share sell-off scheme.

The measures proposed by Xiang to increase revenue include a continued proactive fiscal policy, the "enhancement" of tax collection, stricter control of expenditure, and less "extravagant" spending by government departments.

"We will never allow tax breaks to be given in a way that exceeds authority," Xiang said.

He vowed that his ministry would strictly implement the tax law.

He added that, following the doctrine of national treatment and fair competition espoused by the World Trade Organization, China will gradually perfect its foreign-related tax policies to implement an impartial system of taxation and put competition on an equal footing. National revenue last year was 1.64 trillion yuan (US$198 billion) and State expenditure hit 1.89 trillion yuan (US$229 billion), Xiang said. There was a deficit of 251.7 billion yuan (US$30.4 billion).

The finance minister said the income that exceeded last year's budget was used for infrastructure construction, salary increases for civil servants, road construction and social security.

The legislators also heard a report by Li Jinhua, auditor-general of the National Audit Office, on the auditing of last year's central budget performance and on other revenue and expenditure.

(China Daily June 27, 2002)