China’s fiscal revenue growth picks up in 2023

BEIJING: China’s fiscal revenue rose 6.4% in 2023 from a year earlier, picking up significantly from a 0.6% increase in COVID-hit 2022, China’s Vice Finance Minister Wang Dongwei told a press conference in Beijing on Thursday.

China’s economy has been stuck in an uneven and sputtering post-COVID recovery last year, with persistent deflationary pressures, a prolonged housing downturn and geopolitical challenges keeping alive calls for more policy support.

Fiscal expenditures rose 5.4% in 2023, Wang said, adding the government will “maintain a certain intensity in fiscal spending” this year.

“Thanks to economic improvement and the low base effect due to massive tax and fee cuts in 2022, China’s 2023 fiscal revenue staged a recovering growth,” Wang said, adding the general public budget revenue hit 21 trillion yuan ($2.93 trillion) last year.

“All of the 31 provincial economies have achieved growth in their fiscal revenues,” he added.

However, an official survey this week pointed to a still-underperforming economy at the beginning of 2024 in need of more policy support as it showed manufacturing activity contracted again last month due to persistently weak demand.

The property crisis also greatly restricted local governments’ fiscal capacity as income from state land sales was the biggest source of funds that local governments raise directly.

China has instructed heavily indebted local governments to delay or halt some state-funded infrastructure projects, as Beijing struggles to contain debt risks, Reuters reported last month.

Government officials have pledged to implement proactive fiscal policy in 2024, after last October’s approval of 1 trillion yuan of sovereign bond issuance, reinforcing market views that fiscal spending will likely do the heavy lifting to revive the economy.

China will run a budget deficit of 3% of gross domestic product in 2024, lower than 2023’s revised 3.8% target, with off-budget debt optional for other fiscal support, Reuters reported last month. – Reuters