(Yicai) May 30 -- China has implemented more proactive fiscal policies this year to counter the downward pressure on the economy. As a result, the country’s broad fiscal deficit expanded at its quickest clip since 2023 in the first four months.

China’s fiscal deficit widened 54 percent in the four months ended April 30 from a year earlier to CNY2.7 trillion (USD375.6 billion), according to data recently released by the Ministry of Finance.

In the first four months, China’s combined spending under the general public budget and the government fund budget surged 7.2 percent from a year ago to CNY12 trillion (USD1.7 trillion), according to the ministry’s data. While their combined revenue dipped 1.3 percent to CNY9.3 trillion (USD1.3 trillion).

The widening deficit shows how an active fiscal policy has played a key role in supporting economic growth since the start of the year, Zhang Jun, chief economist at China Galaxy Securities, told Yicai.

Social welfare and employment have been the top priorities in terms of fiscal expenditure. In the first four months, spending on social security and employment surged 8.5 percent year on year to hit CNY1.7 trillion (USD236.5 billion), making it the fastest-growing spending category. Education came next, surging 7.4 percent to CNY1.4 trillion.

As the economy stabilizes, tax revenue, which makes up the bulk of fiscal revenue, rose for the first time this year in April, climbing 1.9 percent year on year to CNY1.8 trillion (USD250.4 billion). However, in the four months ended April 30, the tax haul still dipped 2.1 percent to CNY6.6 trillion (USD917.3 billion).

With fiscal revenue declining, China has been issuing more government debt to fund its increased spending. Net government bond issuance hit CNY4.9 trillion (USD681.7 billion) in the first four months, almost four times the amount issued in the same period last year, according to the People’s Bank of China.

Net financing through government bonds had reached CNY6.2 trillion (USD862.5 billion) as of May 20, already accounting for 45 percent of the full-year quota, Zhang Yu, deputy director of Huachuang Securities Research Institute, told Yicai. By comparison, only 22.5 percent of the annual quota had been used up over the same period last year.

Given the faster-than-expected rise in fiscal spending in the first four months and the significant hike in government borrowing, the Ministry of Finance is likely to roll out additional debt policies in the second half to raise the annual bond issuance quota, Zhang added.

Editors: Dou Shicong, Kim Taylor