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The Chinese government will continue its crackdown on smuggling and tax evasion to increase its fiscal revenue as it prepares to meet fiscal challenges later in the year.

Chinese Premier Wen Jiabao speaks at the country's anti-smuggling meeting August 5, 2003. [Xinhua/file photo]

Premier Wen Jiabao said Monday that China had maintained a healthy balance between revenue and spending in the first half of this year, but difficulties remained.

Premier Wen told a meeting of the Tariff Policy Commission of the State Council, which opened in Beijing Monday afternoon, that the government would make every effort to increase the fiscal revenue and reduce spending through cracking down on smuggling and tax evasion as well as improving fiscal budgetary management.

The Ministry of Finance said on August 3 that China was likely to see an increase in government spending in the latter half of this year while revenue growth could slow down.

The ministry attributed the predicted spending increase to the impact of SARS (severe acute respiratory syndrome), natural adversities like prolonged droughts in some parts of central-south and South China and severe floods that hit East and Northeast China and the ongoing reform of the social insurance system.

Fiscal revenue reached a year-on-year growth of 20 per cent in the second quarter this year, 16.7 percentage points down from growth in the first quarter, while the growth of spending stood at 20.6 per cent, up 9.7 percentage points, said the ministry source.

Wen said the government would guarantee the budget in disaster relief, agriculture, education, social insurance and re-employment projects while increasing the spending on public health care service.

The Chinese premier vowed to keep the fiscal deficit of central government under the budget and further unfold the reform in the financial sector.

China's fiscal revenue in the first half of this year was 1,095. 5 billion yuan (US$132 billion), up 27.4 per cent over the same period last year. The revenue was 128.9 billion yuan (US$15.5 billion) more than the fiscal expenditure, according to the National Bureau of Statistics (NBS).

The country will try it utmost to maintain the tax revenue while it keeps cutting the tariff in line with the commitment to the World Trade Organization (WTO), Premier Wen said.

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