(Yicai Global) May 17 -- Several Chinese cities, including Shenzhen and Chongqing, have reported diving fiscal revenues last month, which is a result of proactive fiscal policy aimed at dealing with the country's economic downturn, according to the vice minister of finance.

The slumps reflect China's tax breaks and refunds, Xu Hongcai said at a press briefing today.

The decreases have been major. In April, Shenzhen's fiscal revenue declined by 44 percent to CNY25.5 billion (USD3.8 billion) from a year ago. Eastern China's Nanjing reported a nearly 55 percent drop in fiscal revenue to CNY9.5 billion (USD1.4 billion). In the southwestern city of Chongqing, the number slid by 35 percent to about CNY17.9 billion.

April was special. It was the month when China began implementing a large-scale value-added tax credit refund policy to buoy enterprises' finances. The country's tax refunds amounted to about CNY800 billion (USD118.6 billion) in April, equalling 37.5 percent of the total fiscal revenue, according to Xu.

The trend is here to stay. In the 12 months of this year, VAT credit refunds are expected to reach CNY1.5 trillion (USD222.7 billion), said the vice minister. Tax breaks and fee cuts, as well as tax deferrals, should rise to CNY1 trillion.

Various policies to ease economic pressures are being increasingly promoted, said Xu. The new policies have reduced firms' taxes and increased their cash flows by more than CNY1.6 trillion since Jan. 1. Apart from the normal fiscal transfer, the central government has also arranged for a special transfer of CNY1.2 trillion, and some CNY800 billion, which is included in the 2022 budget, has already arrived at regional governments.

This year, China's local governments have issued municipal bonds worth a total of CNY1.5 trillion as of May 15, surging by CNY1.3 trillion from the same period of last year. The central government has strengthened its support to micro and small-scale firms, as well as the severely-hit sectors of catering and logistics amid the Covid-19 pandemic. It has encouraged local administrations to subsidize companies and individual merchants facing difficulties.

Corporate profitability may surge despite the narrowing fiscal revenue, according to Xu. China’s fundamentals of stable economic performance with a good growth momentum remain unchanged, he added. Fiscal revenue should also steadily pick up as the country's epidemic prevention and control measures take effect, he added.

China’s public budget revenue tallied CNY163.05 trillion (USD24.16 trillion) from 2012 to last year, growing by 6.9 percent on average each year, according to data disclosed at the press conference. Government spending totaled CNY193.6 trillion, rising by 8.5 percent on average per year.

Editor: Emmi Laine, Xiao Yi