The central government did not confiscate 1 trillion yuan ($157 billion) of unspent budget allocations from local governments as reported, although it is reallocating a much smaller amount of money, an official with the country's top economic planner said Wednesday.
Reuters, citing unidentified sources, reported on Monday that China had seized up to 1 trillion yuan from local governments that failed to spend their budget allocations.
The figure was "inaccurate" and the government is "sorting out" more than 200 billion yuan in unspent money that will be reallocated to major projects, including some for improving people's livelihoods, said Xu Kunlin, head of the investment department at the National Development and Reform Commission, at a press conference.
With its economy slowing, China has tried to activate unspent fiscal funds to sustain an expansionary fiscal policy and shore up growth.
The Ministry of Finance said in July a total of 13.1 billion yuan of idle fiscal funds would be retrieved from central government departments and another 243.8 billion yuan would be recovered from local government departments. The funds were to be redistributed to areas that urgently needed money to support investment and improve people's livelihoods, the ministry said.
China plans to raise its budget deficit to 2.3 percent of GDP for 2015, up from last year's target of 2.1 percent, as fiscal spending plays a key role in countering downward pressure in the economy.
