China’s economy suffered an uneven and uneven post-COVID-19 recovery last year, with continued deflationary pressures, a prolonged housing recession, and geopolitical challenges calling for further policy support. There is.
Wang said fiscal spending in 2023 increased by 5.4%, adding that the government will “maintain a certain intensity of fiscal spending” this year.
“China’s fiscal revenues in 2023 showed recovery thanks to economic improvement and the low base effect of significant tax and fee reductions in 2022.” growth” said Wang, adding that general budget revenue reached 21 trillion yuan ($2.93 trillion) last year.
“All 31 state economies achieved fiscal revenue increases,” he added.
But an official survey this week showed manufacturing activity contracted again last month due to sustained demand weakness, suggesting the economy will still be weak in early 2024 and will require further policy support. pointed out.
The real estate crisis also severely limited the financial capacity of local governments, as revenue from the sale of state-owned land was the largest source of funds directly raised by local governments.
Reuters reported last month that the Chinese government has instructed heavily indebted local governments to postpone or cancel some state-funded infrastructure projects as the country struggles to contain debt risks.
Following the approval of a 1 trillion yuan government bond issue in October last year, government officials have pledged to implement aggressive fiscal policy in 2024, with fiscal spending expected to play a major role in economic recovery. The market view is increasing that this is highly likely.
Reuters reported last month that China’s budget deficit is expected to be 3% of gross domestic product (GDP), below the revised 2023 target of 3.8%, making extra-budget debt an option for other financial support. (1 dollar = 7.1790 Chinese Yuan)