China Spending Boom Predicted as Gov’t Departments Prepare to Spend Remaining Crisis Budget

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BEIJING, Dec. 15 – As much as 25 percent of the central government’s annual fiscal spending budget for 2009 remains unused according to the Ministry of Finance.

In recently released figures, China’s finance ministry put government spending at RMB5.6 trillion for the year to date, just 73.8 percent of the annual budget.

Local governments that do not spend their expenditure budget are likely to suffer budget cuts in 2010.

The shortfall in expenditure means RMB2 trillion (US$293 billion ) is expected to come into play in the final few days of the year. The 2009 budget was also boosted by the Beijing’s economic stimulus plan, designed to lift consumerism. The spending boom however may well result in a plethora of financial malpractice, such as unnecessary luxury property development, the acquisition of expensive vehicles, gambling, and the wholesale spending of large sums on luxury items and goods.

Investment in China’s stock exchanges is also likely to increase as officials look to park the money somewhere.