China's decision to increase its budget deficit ratio to 2.8% this year from 2.6% in 2018 is appropriate for the economy, and leaves room for policymakers to manoeuvre, Finance Minister Liu Kun said.

But a proactive fiscal policy does not mean China will open the floodgates for stimulus, Liu said, reiterating past government pledges of restraint.

"We will not spend a penny that is not supposed to be spent, and we'll strive to guarantee the money that is supposed to be spent," Liu said.

For 2019, Beijing is planning cuts of nearly 2 trillion yuan in taxes and fees for companies, featuring long-awaited reductions in value-added tax for manufacturing, transport and construction sectors.

Liu acknowledged that the planned tax cuts will exert some pressure on local government finances, but he pledged more funds will be transferred from the central government to localities.