Update | China to add US$72 billion to budget deficit amid global concern over its debt problem

China will budget a fiscal deficit of 3 per cent of gross domestic product for 2016 to ensure a “reasonable range” of growth in a year that is expected to see more economic challenges.

The 2016 budget deficit, 2.18 trillion yuan (HK$2.6 trillion), is a 560 billion yuan increase from last year, according to the Ministry of Finance in its work plan unveiled on Saturday at the country’s annual parliamentary meetings.

Last year’s actual fiscal deficit was 2.4 per cent of GDP.

READ MORE: 5 big numbers we’re waiting for that will define China’s political and economic situation

This year’s proposed GDP target was set at 6.5 to 7 per cent, the report stated.

The range target – as opposed to a specific numerical target – reflects Beijing’s dilemma between pursuing between economic growth and pushing ahead with reforms.

Last year, China targeted a growth of “about 7 per cent” when actual GDP growth slowed to 6.9 per cent – the lowest in a quarter of a century.

Economic growth required stronger policies, the report said.

Fiscal policy is expected to take the lead this year, with the debt-to-GDP ratio projected at 3 per cent, an increase from last year’s budgeted 2.3 per cent.