Modest forecasts in budget signal efforts to control spending

Finance Minister Jin Renqing is expected to unveil a conservative budget for this year, forecasting sharply lower growth rates in revenue and expenditure.

The lower forecasts signal the central government's efforts to rein in its deficit spending and cool the overheating economy.

Revenue should grow 7 per cent to 1.38 trillion yuan this year, while expenditure is expected to expand 5.6 per cent to 1.7 trillion yuan, leaving a 319.8 billion yuan deficit - the same as last year, Mr Jin will tell the National People's Congress deputies today.

Central government revenue rose 9.6 per cent to 1.25 trillion yuan last year, while expenditure rose 8.3 per cent to 1.57 trillion yuan, Mr Jin says in his report, which was seen by the South China Morning Post.

This year will be the first in recent years that the budget deficit has not grown as the leadership under President Hu Jintao and Premier Wen Jiabao has started to discard former premier Zhu Rongji's economic policies. These were characterised by huge deficit spending and relentless pursuit of economic growth targets.

In his Government Work Report delivered to the NPC yesterday, Premier Wen set a 7 per cent economic growth target for this year after a 9.1 per cent rise last year.

But Mr Jin says in his budget that military spending for this year will rise by 21.83 billion yuan, or 11.6 per cent. Last year, 185.3 billion yuan was allocated to the military.