China's Government Spending Rose 7.5% in First Nine Months, Outstripping Revenue
Liao Shumin
DATE:  Oct 20 2018
/ SOURCE:  Yicai
China's Government Spending Rose 7.5% in First Nine Months, Outstripping Revenue China's Government Spending Rose 7.5% in First Nine Months, Outstripping Revenue

(Yicai Global) Oct. 19 -- China's fiscal expenditure rose 7.5 percent to CNY16.33 trillion (USD2.36 trillion) in the January to September period, topping the amount taken in, according to the latest figures.

Revenue gained 8.7 percent to CNY14.6 trillion in the first nine months of the year, from a year earlier, the finance ministry said yesterday.

Fiscal revenue underwent fairly stable, rapid growth with consistently improving quality as a result of an increase in the main tax categories that closely relate to economic performance, said Du Qiang, deputy head of the ministry's State Treasury Bureau.

The tax intake jumped 12.7 percent to CNY12.75 trillion, accounting for 87.4 percent of overall revenue and 3.7 points higher than in the same period last year. Non-tax income fell 12.8 percent to CNY1.83 trillion.

Personal and corporate income taxes boosted overall revenue 4 percent, while industrial and commercial value-added taxes went up 3.8 percentage points, in tandem with the adjusted VAT, which replaced business tax. This was mainly due to the relatively prosperous industrial, commercial and service sectors, as well as an uptick in product prices.

Import taxes buoyed total income by 1 percentage point, mostly from a 16.3 percent gain in general imports. All of the above tax categories drove an 8.8 points increase in fiscal income growth, Du added.

Growth in fiscal revenue and gross domestic product are calculated based on different metrics. The former is determined at current value, while GDP is assessed per a constant value, and neither can be directly compared without any adjustment, Yuan Haiyao, deputy inspector of the finance ministry's taxation division, said when asked about the increased rate of fiscal revenue in the first three quarters (8.7 percent) surpassing that of GDP (6.5 percent, with a comparable value of 6.7 percent).

Fiscal revenue will decline gradually in the second half after an uptick following the start of tax and fee reduction policies. The rate of increase for the full year will be lower than that of GDP calculated at current value, Yuan added.

The government's work report at the start of this year mandated CNY1.1 trillion in tax cuts and exemptions. Measures to promote tech innovation and the real economy came out mid-year and tax changes may reach over CNY1.3 trillion by year's end, as predicted.

Poverty alleviation cost CNY315 billion (USD46 billion), up 50 percent, while outlays on preventing pollution and protecting the environment climbed 20 and 36 percent, and spending on science and technology reached CNY544 billion, up 17 percent. 

Education took the biggest bite, however, jumping 6.5 percent to CNY2.4 trillion, according to Hao Lei, deputy head of the ministry's budget department.

Editor: Ben Armour

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