China’s fiscal spending fell in August for the first time this year, underscoring the difficulty central and local governments face in bolstering economic growth, said Caixin.
Expenditure was RMB 1.511 trillion ($210 billion) in August, a 0.2% decline from the same period last year, according to Caixin calculations based on data released by the Ministry of Finance on Tuesday. Down from a 3.4% increase in July and the first drop since November 2018. Cumulatively for the first eight months of the year, fiscal spending increased by 8.8%, the ministry said.
The economic slowdown and a raft of tax and fee cuts announced over the past 18 months has eaten into fiscal income, which increased by just 3.3% year-on-year in August, although that was the highest growth since March. Tax revenue, which makes up more than 80% of the total, fell 4.4% year-on-year in August, the fourth consecutive monthly decline.
Revenue from corporate tax fell 13.4% from a year earlier in August, a decline the ministry attributed to lower tax rates for companies focused on research and development and for small and micro enterprises. In contrast, the government’s nontax revenues, which include profits from state-owned enterprises and the sale of state-owned assets, surged 49.8% from a year earlier in August. In the first six months of the year, nontax revenue jumped by 21.4%.