China’s budget spending falls 2% YoY

China’s total public budget and government fund spending was around 19.7 trillion yuan ($2.8 trillion) in the first seven months of 2024, a two per cent decrease from the same period in 2023.

The decline in budget expenditure and a significant drop in local government revenue from land sales highlight fiscal challenges, potentially leading Beijing to consider further stimulus measures to support the $17 trillion economy.

The decrease in revenue was driven by an 8.9 per cent decrease in land-related expenditure, including payments for land development and compensation for rural infrastructure.

Local governments are cutting spending due to a housing downturn, leading to a drop in land sales revenue by over 40 per cent in July compared to the previous year.

The impact of the property market on public finances is evident in the balance sheets of indebted local governments.

Total revenue for the first seven months was 15.9 trillion yuan, down 5.3 per cent year-on-year, resulting in an augmented deficit of 3.8 trillion yuan.

Attribution: Bloomberg

Subediting: M. S. Salama