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China will enter the 11th Five-Year Plan period beginning 2006, and fiscal policymakers are mapping out their development guidelines. Will there be any strategic adjustments in China's fiscal policy, and what will be the major focuses? Officials from China's Ministry of Finance met with experts from the World Bank in Beijing, hoping to draw on international expertise, and discuss future cooperation.

Chinese Vice-Minister Li Yong said promoting economic growth would remain the primary task for this year's public finance. The government will continue to reform tax policy measures to improve the investment climate.

He said China is shifting from its pro-active and expansionary fiscal policy to a more steady and prudent one. The fiscal budget deficit is expected to stand at about 36 billion US dollars, 2.3 billion US dollars less than in 2004. Meanwhile, the government will give priority of public expenditure to boosting economically less developed areas of the country, and raise efficiency in the use of the money.

Li Yong, vice minister of finance, said, "We will better allocate money on agriculture, less developed regions, environment protection and energy conservation. These are the 'weak points' in our economy. We will use our fund more efficiently."

This approach is in line with suggestions from economists at the World Bank. China's economy has benefited greatly from a robust growth of exports. But given the relatively sluggish economic growth in other parts of the world, experts suggest China shift to a more domestic-oriented growth. And they say fiscal and financial policies should play a bigger role in stimulating domestic consumption, especially on social services.

David Dollar, country director, the World Bank, said, "China right now spend relatively little government money on health and education... In terms of fiscal policy, more expenditure should goes to important social services, that will increase consumption of important services for Chinese people."

The Ministry of Finance and World Bank have been cooperating extensively in knowledge sharing and finance. And with the deepening of China's economic and social reforms, both sides have expressed willingness to deepen that cooperation.