China pledged to keep spending at a similar rate in 2024 despite a property market slump weighing on key government revenue sources, raising hopes that fiscal expansion can provide more support for a slowing economy, reports Caixin. Fiscal spending in 2024 will be maintained at a “necessary intensity,” Ministry of Finance officials said Thursday. Hours later, data showed that Beijing withdrew stimulus last year, with 2023’s overall deficit at RMB 8.84 trillion ($1.2 trillion). That was lower both in absolute terms and as a share of gross domestic product than the previous year, according to Bloomberg calculations based on official data.
The more conservative fiscal stance reflects government concerns about debt, and expectations that consumer spending would drive demand for goods and services after the end of coronavirus restrictions. But economists have argued that weak government stimulus amid a property downturn was a key cause of sluggish demand and deflation.
Leaders have promised in recent weeks to strengthen fiscal policy, but Beijing wants to balance that commitment with managing risks from debt-ridden local authorities, as the property slump affects their ability to generate cash.