China right to pursue proactive fiscal policy to grow economy: World Bank

BEIJING (AFX-ASIA) - China is right to continue the proactive fiscal policy it has pursued over the last few years, particularly in view of the looming global downturn and the importance of maintaining strong domestic demand, World Bank vice president for the East Asia and Pacific Region, Jemal-ud-din Kassum, said.	    The bank is "confident that China can handle the kind of proactive fiscal policy it has in mind", he said, adding that China's overall levels of foreign and domestic debt are low by international standards.	    Earlier this month, Finance Minister Xiang Huaicheng said the government would run a record budget deficit of 259.8 bln yuan this year, slightly higher than last year, and that its proactive fiscal policy would continue in the short term.	    Mr Kassum said that China's fiscal policy over the last few years has been very successful.	    It added between 1.5 and 2.0 percentage points to the growth rate each year and helped China maintain both growth and macroeconomic stability at a time of turbulence in the region during the Asian financial crisis.	    "Given the success of the past few years, one can expect that a continuation of this policy will also have a positive result," he said.	    "In the near term, we think it will be quite appropriate to continue a proactive fiscal policy, particularly in view of the external downturn that we can all see and the importance of maintaining a strong domestic demand."	    However, he said, that in the medium to long term, "there will come a moment at which some fiscal consolidation is needed". 	    Mr Kassum said that during discussions earlier this week with Finance Minister Xiang, the minister appreciated that in the medium to long term the proactive fiscal policy would be reviewed, although he did not provide exact dates.	    "The main thing is that we have confidence in the macroeconomic management to take those decisions at the appropriate time."    

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