(Yicai Global) July 21 -- The pace at which China’s fiscal spending grew in the first half slowed compared with the first five months and a year earlier, according to the latest official figures.

Fiscal spending rose 3.9 percent to CNY13.39 trillion (USD1.87 trillion) in the six months ended June 30 from a year earlier, finance ministry data showed this week.

That was less than the 5.8 percent clip recorded for January to May as June’s expenditure fell 2.5 percent from a year ago and was down from 5.9 percent in the first half of 2022.

A possible reason for the slowdown was the high base of comparison last year, as widespread Covid-19 outbreaks in the first half of 2022 led to a jump in fiscal spending, according to experts.

A fall in government fund income was also to blame, said Gao Ruidong, chief macroeconomist at Everbright Securities.

Government fund income slid 16 percent to CNY2.35 trillion (USD327.9 billion) in the first half from a year ago, according to the data. Revenue from local government land sales, which accounts for nearly 80 percent of fund income, plunged 21 percent in the period.

Significant adjustments to the real estate market led to a sluggish land market, which in turn cut demolition and relocation compensation costs, causing fiscal expenditure to fall, experts said, adding that the main focus of spending remained on welfare and debt interest payments.

Spending on social security and employment, education, and health rose 7.9 percent, 5 percent, and 6.9 percent, respectively, in the first half from a year earlier, Xue Xiaoqian, a finance ministry official, told reporters on July 19.

Fiscal expenditure will increase in the second half because there are enough projects and funds, said Zhang Yu, chief macro analyst at Huachuang Securities. Broad spending growth will rebound to over 5 percent, which will benefit the infrastructure sector, he predicted.

Editor: Futura Costaglione