(Yicai Global) Jan. 11 -- Many Chinese provinces, including northeastern Jilin and Shandong as well as southeastern Zhejiang and Fujian, beat expectations to earn more than their projected income last year, as the Covid-19 pandemic is mostly under control and the economy bounces back.
Jilin logged fiscal revenue of CNY114.4 billion (USD18 billion) in 2021, CNY3.7 billion (USD577.5 million) more than it had anticipated at the beginning of the year, according to the latest data from provincial departments of finance. Zhejiang’s income topped the budget by CNY58.3 billion (USD9.1 billion), while Shandong and Fujian were CNY39.6 billion and CNY16.6 billion under budget, respectively.
Local governments took unpredictable factors such as the Covid-19 pandemic into account when creating their budget last year and were more cautious, said Shi Zhengwen, professor at China University of Political Science and Law. The economy has also recovered well, so it is not unusual to have better-than-expected fiscal revenues.
The hike in commodity prices, the surge in exports and reduced tax cuts all helped boost local government coffers, said Deng Shulian, professor at Shanghai University of Finance and Economics. There has also been less fiscal expenditure as the proportion of infrastructure-related spending has dwindled.
Revenue in excess to the budget can only be used to offset the deficit or to supplement the budget stabilization fund, according to Chinese law.
This year might be more challenging for provincial governments as China is under great economic pressure from the triple stresses of narrowing demand, supply issues and weakened expectations, another analyst said. The central government will likely implement more tax cuts and fee reductions in order to bail out companies, which will eat into local governments’ income. Revenue from land sales is also on the decline as the land market has been cooling since the second half of last year.
Editors: Zhang Yushuo, Kim Taylor