China’s fiscal revenue has had its steepest drop since February 2023, according to Bloomberg calculations based on data from China’s Ministry of Finance, fueling expectations that the government could make another rare mid-year budget revision to aid an economic recovery, reports Bloomberg. Total revenues, including the general public budget and the government funds budget, fell 4.1% this year from January-May 2023 to RMB 11.38 trillion ($1.6 trillion).
The combined spending under the two accounts fell 2.2% on-year to RMB 13.61 trillion in the first five months. That leaves a fiscal shortfall of RMB 2.25 trillion, widening from January-May last year but below the level recorded during the same period in 2022.
The government’s budget has been under strain as slowing economic growth weighed on tax income, while a multiyear property market downturn slashed its income from land sales. Local officials have become more aggressive in chasing companies for taxes dating back decades as they try to plug a hole in their finances caused by the housing crisis.