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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.

Premier Wen Jiabao said yesterday 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 here yesterday 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.

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.

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