(Yicai Global) Feb. 3 -- China’s fiscal deficit hit a record CNY8.96 trillion (USD1.33 trillion) last year, topping the CNY8.72 trillion high set in 2020, when Covid-19 broadsided the economy.

Government spending from the general public and government fund budgets rose 3.1 percent year on year to CNY37.12 trillion (USD5.5 trillion) in 2022, while revenue from those budgets fell 6.3 percent to CNY28.16 trillion, finance ministry data showed on Jan. 30.

Growth in the general public budget’s revenue, which includes income from taxes, has slowed in recent years, mainly because of the economic fallout of the pandemic along with big tax cuts and rebates. It fell in 2020 and nudged only 0.6 percent higher last year to nearly CNY20.4 trillion.

The government fund budget’s revenue was CNY7.8 trillion last year, down 20.6 percent from 2021 and just 79 percent of the goal set at the start of 2022 because of the economic downturn and struggling property sector. Local government fund budget income from the sale of state land use rights sank 23.3 percent to CNY6.69 trillion.

Government spending was driven higher last year by fiscal policies to support the economy, the use of CNY1.65 trillion in profits from the central bank and other institutions, and the issuance of a record CNY4 trillion in new special bonds by local governments.

Outstanding local government debts tallied about CNY35 trillion at the end of December, remaining below the ceiling approved by the National People's Congress, while the local government debt ratio is estimated to have reached about 120 percent at the end of last year.

The fiscal deficit ratio may widen a little this year to boost fiscal spending, experts told Yicai Global, adding that the 2023 target is likely to be set at 3 percent or moderately higher. Local government special bond sales may remain above CNY3.6 trillion, they said, noting that the issuance of policy- and development-oriented financial instruments may also stay at a high level.

Editors: Liao Shumin, Futura Costaglione