China 2010 fiscal deficit dips to 1.6 percent of GDP

BEIJING (Reuters) - China's budget deficit in 2010 hit about 650 billion yuan ($99 billion), or 1.6 percent of gross domestic product, well below Beijing's target of 2.8 percent set at the beginning of last year, according to preliminary data published by the finance ministry on Thursday.

The figure was also lower than the deficit of 950 billion yuan, or 2.8 percent of GDP, registered in 2009.

That might be welcome in most countries, but in China the government has been targeting a larger deficit as part of efforts to increase public spending on education, health care and the social security system.

Nationwide fiscal revenues rose 21.3 percent to 8.31 trillion yuan in 2010, while expenditures increased 17.4 percent to 8.96 trillion yuan, the ministry said.

Beijing had budgeted last year for revenue growth of 8 percent and expenditure growth of 11.4 percent, for a total deficit of 1.05 trillion yuan.

The ministry attributed the revenue growth to a strong economy, rising prices and low base of comparison.

Several types of taxes, including value added tax on imported products, consumption tax and car purchase tax, had grown faster than expected, the statement added.

The ministry said the figures were subject to revisions at the end of January.

(Reporting by Aileen Wang and Koh Gui Qing; Editing by Simon Rabinovitch)