China’s fiscal revenue continued its upward trajectory in October 2024, with a 5.5% year-on-year increase, according to data released by the Ministry of Finance on Monday. The increase in revenue highlights the country’s sustained economic recovery, with tax revenue specifically rising by 1.8% from the previous year.
Breakdown of Fiscal Performance
- Tax Revenue: The growth of 1.8% in tax revenue signals a gradual recovery in domestic economic activity, with higher business profits and improving consumption likely contributing to the increase.
- First 10 Months of 2024: Over the first ten months of the year, however, the overall fiscal revenue showed a 1.3% year-on-year decline. This decline was primarily driven by the central government, which saw its revenue drop by 3.9% year on year, amounting to 8.25 trillion yuan (approximately $1.15 trillion). On the other hand, local governments experienced a 0.9% year-on-year increase, collecting about 10.25 trillion yuan during the same period.
Fiscal Expenditure
On the expenditure side, China’s fiscal spending also saw an uptick, with an overall 2.7% increase year on year. Notably:
- Central Government Expenditure: Central government spending surged by 7.9%, reflecting increased outlays to support the country’s economic recovery efforts and infrastructure projects.
- Local Government Expenditure: Local government expenditure saw a more moderate rise of 1.8%, suggesting a more cautious approach in spending at the local level compared to the central government.
Economic Context and Outlook
Yang Zhiyong, head of the Chinese Academy of Fiscal Sciences, noted that the rise in fiscal revenue for October signals stronger economic recovery momentum. This is consistent with the broader trend of economic stabilization and growth as China continues to rebound from the impacts of the COVID-19 pandemic.
Despite the modest drop in fiscal revenue for the first ten months of the year, the uptick in October’s revenue, coupled with stronger local government performance, reflects the resilience of China’s recovery, driven by consumer demand, industrial production, and targeted policy interventions.
Looking ahead, China’s fiscal policy remains focused on sustaining growth, enhancing economic stability, and supporting the country’s long-term development goals, particularly through increased public investment and infrastructure projects.