China's fiscal revenue falls 0.6% in January-November

AI Sentiment: Bearish
Reason: China's fiscal revenues decreased by 0.6% from January to November, marking the first contraction since 2018. This decline is attributed to tax and fee reductions and a slowing economy. Experts are concerned about the sustainability of China's fiscal revenues amidst economic uncertainties and pandemic effects.

Fiscal revenues in China witnessed a 0.6% decrease during the January-November period, according to official data. This is the first contraction reported in China’s fiscal revenues since the year 2018. The decline has been attributed to tax and fee reductions and the slowing economy.

According to a statement from the Ministry of Finance, fiscal revenues totaled 17.23 trillion yuan ($2.72 trillion) during the January-November period. In November alone, fiscal revenues fell by 5.5% from a year earlier to 1.18 trillion yuan. This marked the steepest decline since February 2021, when revenues fell due to a high base of comparison with 2020 and reduced income from property transactions.

On the other hand, China's fiscal expenditures rose by 4.8% during the same period to reach 21.05 trillion yuan. The increase in fiscal spending is seen as a means to support the economy amidst growing headwinds. These include a downturn in the property sector, supply chain disruptions, and the global spread of the Omicron variant of the coronavirus.

The data also revealed a fall in income from property transaction taxes, which accounted for around 7.1% of total fiscal revenues. In contrast, revenue from value-added tax, which makes up around half of total fiscal revenues, rose by 6.8%.

Experts suggest that the latest fiscal data indicates the challenges posed by the cooling economy and the impact of tax and fee cuts. They also express concern about the sustainability of China's fiscal revenues, given the ongoing economic uncertainties and the continuing effects of the pandemic.

The Chinese government has pledged to maintain a proactive fiscal policy while making necessary adjustments to respond to economic changes. This is in line with their commitment to ensuring macroeconomic stability and promoting high-quality development.