The combined expenditure in China’s two main budgets—the general public account and the government-managed fund book—tumbled 19% in October from a year earlier to RMB 2.37 trillion yuan ($334 billion), according to Bloomberg calculations based on data released by the Ministry of Finance on Monday. The slump in broad fiscal spending is the most since 2021, and is a blow to a key driver of investment and economic growth.
This could well have a significant impact on China’s economy, which for a while now has been supported by government or government-related spending across a wide range of sectors and in the country’s financial markets. While there is the analytical hurdle of China’s lack of transparency, based on the evidence of recent months, it is safe to assume that the government is under a reasonable level of financial pressure, both at the national but especially at the local levels.
Obviously, that lack of transparency also presents a danger in declaring outright whether China’s economy is going one way or the other, but this is another sign that points to a negative trend.