China’s fiscal revenue growth accelerates as economy recovers

China’s fiscal revenue growth accelerates as economy recovers

16 Sep    Finance News

Article content

BEIJING — China’s fiscal revenue growth speeded up in the first eight months compared with the January-July period, finance ministry data showed on Friday, indicating that local fiscal strains eased slightly although revenue from land sales shrank.

Fiscal revenue grew 3.7% in January-August from a year earlier, after adjusting for the impact of value-added tax credit rebates, exceeding a 3.2% rise in the first seven months.

Article content

Revenue before the adjustment dropped 8% to 13.8 trillion yuan ($1.97 trillion) in the first eight months.

Advertisement 2

Story continues below

Article content

For August alone, fiscal revenue grew 5.6%, the first gain since April, according to Reuters calculations based on the official data.

See also  Frasers Group CEO Michael Murray warns of ‘softening’ in global luxury market as sales fall

Government revenue from land sales continued to shrink but at a much less drastic pace, falling 4.9% in August compared with a 33.2% drop in July, according to Reuters calculations.

Local governments have eased rules on land transactions to encourage buying by property developers, who have grown cautious due to tight liquidity.

“Home buyers in some cities refused to make mortgage payments on unfinished homes, exacerbating liquidity challenges for property developers. Weaker property prices have further weighed on buyers’ sentiment,” Moody’s said in a research note.

“We expect regional local government land sales to continue to fall, although at a slower rate, in the second half of the year.”

Advertisement 3

Story continues below

Article content

Many local governments face fiscal stress this year due to massive tax cuts and less income from land sales as developers became cautious during the property crisis, while spending has risen due to mass COVID testing.

China’s economy showed surprising resilience in August, with faster-than-expected growth in factory output and retail sales shoring up a fragile recovery, but the deepening property slump weighed on the outlook.

Policymakers have announced more than 50 economic support measures since late May and stressed that this quarter was a critical time for policy action.

Fiscal spending totalled 16.5 trillion yuan in the first eight months, up 6.3% from a year earlier, finance ministry data showed.

Spending growth in August slowed to 5.6% from July’s 9.9%, according to Reuters calculations based on the data. ($1 = 7.0201 Chinese yuan renminbi) (Reporting by Ellen Zhang, Kevin Yao and Liangping Gao; Editing by Hugh Lawson and Edmund Klamann)

See also  U.S. natgas futures jump 5% with output slow to return, profit taking


Story continues below


Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Leave a Reply

Your email address will not be published. Required fields are marked *