Gain in fiscal spending, revenue slows
Print Edition
CHINA’S fiscal expenditure rose 2.6 percent to 1.31 trillion yuan (US$211 billion) in May year on year, easing from a 33.2 percent jump in April, Ministry of Finance said yesterday.
Central government spending rose 8.6 percent from a year ago, slowing from 19.7 percent in April, while local government expenditure grew 1.2 percent, a sharp drop from 36.7 percent in April, the ministry said.
The sharp slowdown in local spending came after local governments “earmarked spending in advance in some key projects,” the ministry said, without further elaboration.
From January to May, expenditure on environmental protection rose 29.7 percent to 112.4 billion yuan from a year earlier, spending on transport added 18.6 percent, and social security and employment expenses rose 18.5 percent, the ministry said.
“An economic slowdown, lower profit of companies and commodity prices have affected both governments’ expenditure and revenue, while a cooling property market hit government land sales income,” said Li Zhiping, macro-economic analyst at Sinolink Securities Co.
“We see government spending to speed up in June and July to relieve the liquidity pressure,” Li added.
Fiscal revenues grew 5 percent to 1.43 trillion yuan in May from a year earlier, slowing from a 8.2 percent rise in April.
Due to the plunge in import commodity prices and a cooling real estate sector, value-added tax and consumption tax fell 20.5 percent to 98.2 billion yuan while tariff income shed 18.5 percent to 20.4 billion yuan, the ministry said.
Separately, the ministry said on Wednesday that it has approved a second batch of local government debt swap worth 1 trillion yuan to ease the financial strain, doubling the size of the existing swap program announced in March.
Zhao Yang, analyst at Nomura Securities Co, said 4.1 trillion yuan of local government debt will expire this year.
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