Fiscal spending rises slower after surge
Print Edition
CHINA’S fiscal spending rose slower in July after surging over the previous two months as indications pointed to a halt in the government stimulus plan, and authorities are expecting fiscal pressure as revenue may rise slower in the coming months.
The central and local government expenditure rose 9.6 percent in July from a year ago to 1.03 trillion yuan (US$167 billion), the Ministry of Finance said in a statement. The gain was a sharp drop from a surge of 26.1 percent in June and 24.6 percent in May.
The slowdown was attributed to a lag in local government spending as the growth fell to 9.3 percent from 26.1 percent in June and 26.9 percent in May.
The ministry last month attributed the spending surge in May and June to “increasing investment in key projects.”
Wang Yongjun, a professor at Central University of Finance and Economics, said the pace of government investment may resume in the coming months as local governments usually confirm their spending plans in the second half of a year.
Fiscal revenue in China rose 6.9 percent from a year ago to 1.26 trillion yuan in July, slowing from 8.8 percent in June and 7.2 percent in May.
A slower growth in the property market has hurt government income last month as income tax from property firms fell 15.5 percent year on year, and business tax from real estate rose by only 4.7 percent.
The ministry said central government revenue will find it difficult to grow in the coming months due to tax cuts and a high base last year.
Experts have expected fiscal pressure on local governments this year as the need to spend outpaced their ability to generate revenue at a time when the real estate market cools.
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