In the first quarter of the current year, China’s fiscal revenue showed a decrease of 2.3% compared to the result for the same period in 2023.
The mentioned downward indicator is largely due to the impact of some special factors, including the previous version of the Asian country’s political strategy to cut taxes. The corresponding statement was made by the Ministry of Finance of China on Monday, April 22.
Last week, data was released indicating that the world’s second-largest economy showed growth exceeding preliminary expectations in the first quarter of 2024. This information became an occasion for a kind of reassurance to officials. At the same time, the March data indicate that domestic demand in the Asian country is weak. The expert community also notes the fact that the downturn in the Chinese real estate market continues to be a factor of negative impact on the financial capabilities of the municipal authorities of the Asian country.
China’s tax revenue in the first quarter amounted to 4.9 trillion yuan ($676.48 billion). This indicator fell by 4.9% year-on-year. At the same time, revenue from culture, tourism, and advanced segments of the manufacturing industry was on a rapid growth trajectory in the first quarter. This was announced by Chinese Vice Finance Minister Wang Dongwei at a press conference held in Beijing on Monday. According to him, excluding special factors, including a high tax base and a policy of cutting concerned payments in 2023, the fiscal revenue of the Asian country increased by about 2.2% year-on-year in the first quarter.
Wang Dongwei says that in the period from January to March 2024, China’s fiscal expenditures amounted to almost 7 trillion yuan. This indicator showed a 2.9% year-on-year decline. At the same time, the fiscal expenditures of the Asian country in January-February 2024 increased by 6.7% compared to the figure for the same period in 2023.
Commenting on the slow issuance of special bonds by Chinese municipal authorities, Wang Jianfan, an official at the Ministry of Finance, said that the mentioned activity was related to the need for cash injections into local projects, seasonal influence on construction conditions, and interest rates on the market of debt securities. Also in this context, it was noted that in response to the impact of the coronavirus pandemic, the mentioned Ministry increased the volume of issuance of the specified bonds at the beginning of each year.
The Ministry of Finance intends to provide comprehensive support to technology-based industrial innovations and support the development of technological innovations through the implementation of a policy of cutting taxes and fees.
Beijing is currently focused on investing in the high-tech manufacturing area. These efforts are being undertaken as part of the Chinese leadership’s desire to stimulate economic growth against the background of such negative realities as weak domestic demand and the crisis in the real estate sector.
The Ministry of Finance also plans to take measures to strengthen macroeconomic control. Moreover, there is an intention to expand domestic demand, cultivate and develop new economic growth factors, and prevent and defuse risks.
Funds from sovereign bonds issued in 2023 were transferred to municipal authorities by the end of February of the current year. In the first quarter, spending on disaster prevention and emergency management at the expense of the mentioned funds increased by 53.4%. In recent days, amid record-breaking rains, flooding occurred in several cities in the densely populated Pearl River Delta in southern China.
As we have reported earlier, S&P Says About Loosening of China’s Fiscal Stimulus.
