China fiscal policy to stay proactive: MOF official

China will maintain a "proactive" fiscal policy in 2011 to build roads, subways and other infrastructure, Xinhua news agency reported on Sunday, citing the head of the Research Institute for Fiscal Science at the Ministry of Finance.

Jia Kang, speaking at the China Textile Round-Table Forum Annual Conference 2011, said additional investment programmes were needed even after the two-year, 4 trillion yuan (USD 585 billion) stimulus launched by the central government in 2008 to combat the global downturn.

During the annual Central Economic Work Conference in December, officials decided to continue a proactive fiscal policy in 2011 while switching their monetary policy stance from relatively loose to prudent.

Jia said China's fiscal policy, after years of being "proactive," would return to "prudent" when appropriate. "However, it would be a gradual exit which is not likely to happen in 2011," Xinhua quoted him as saying.

Many private economists have credited Beijing's stimulus spending and record bank lending with helping China's economy continue to post strong growth while other major economies suffered severe slowdowns during the global financial crisis.

But some economists have said more of China's stimulus should have been aimed at bolstering domestic demand, which could help make growth less dependent on direct government spending programs.

Jia, however, said many regions and cities were still suffering from inadequate roads or subway systems, saying Beijing in particular needed more subway lines to help relieve the city's severe traffic jams.

"China also needs to make investments in a nationwide medical insurance system and affordable housing, to expand domestic consumption and improve the living standards of the people," Xinhua quoted Jia as saying.