China’s Fiscal Revenue Drops 2.8% Amid Weak Economic Recovery

by Nicholas Edwards · 23/06/2024

China’s fiscal revenue fell by 2.8% in the first five months of 2024, indicating weak economic recovery and low domestic demand. Learn about the fiscal stimulus measures taken to address these challenges.

China, Bollywood Fever: China’s fiscal revenue fell 2.8% in the first five months of 2024 compared to a year earlier, an acceleration from the 2.7% decline seen in the January-April period, as weak demand continues to hinder the economic recovery, official data showed on Monday.

Fiscal expenditure rose by 3.4% in the first five months, slightly lower than the 3.5% increase reported for the first four months, according to data from the finance ministry. In May alone, fiscal revenue decreased by 3.2% year-on-year, following a 3.7% decline in April. Fiscal spending in May grew by 2.6%, compared to a 6.1% rise in April, based on calculations by Reuters using ministry data.

China has pledged greater fiscal stimulus to support its fragile economy, with an ambitious growth target of around 5% for this year, putting pressure on policymakers to stimulate domestic activity amid escalating trade tensions with the West.

To support economic recovery, Beijing has initiated the sale of 1 trillion yuan ($137.82 billion) in long-dated special treasury bonds and launched government-subsidized incentives to encourage trade-ins of automobiles and other consumer goods.

However, worsening declines in property investment and sales, along with key monetary indicators hitting record lows, have raised concerns about the persistent weakness in domestic demand. The government’s efforts to address these challenges through fiscal measures will be crucial in achieving its growth objectives for the year.