China’s revenue drops 2.7% in first four months of ’24

China’s economic recovery faces a slowdown as year-on-year fiscal revenue growth worsens, with a 2.7 per cent decline in the first four months of 2024 compared to a 2.3 per cent decline in the first quarter, Reuters reported on Monday.

Despite a 3.5 per cent increase in government spending, revenue declined by 3.7 per cent in April, compared to a 2.4 per cent decrease in March. Spending also rose by 6.1 per cent in April, higher than the 2.9 per cent decrease in March.

The Ministry of Finance recognises that the current figures are influenced by high revenue from 2023 and recent tax cuts. After adjusting for these factors, the Ministry reports a two per cent growth in fiscal revenue for the first four months.

This news adds to concerns about China achieving its ambitious 2024 economic growth target of around five per cent. Analysts highlight persistent weaknesses in the property sector and sluggish consumer spending as major obstacles to growth.

Factory output exceeded expectations in April, driven by strong external demand. However, retail sales slowed unexpectedly, and the struggling property sector continues to weigh on the economy. The Chinese government faces increasing pressure to introduce additional stimulus measures.

The expansion of total social financing (TSF), a measure of credit and liquidity in the economy, hit a record low of 8.3 per cent in April. This slowdown coincides with lagging government bond issuance.

In a recent effort to revive the economy, China unveiled a series of “historic” property easing measures on Friday. Additionally, the Ministry of Finance initiated the issuance of 1 trillion yuan in long-term special treasury bonds to boost key sectors.