(Yicai) Aug. 7 -- Twenty-seven out of China’s 31 provincial-level regions posted gains in fiscal revenue in the first six months from a year earlier, according to the latest data. However, growing fixed expenditures continue to put pressure on local government budgets.

In the first half, local general public budget revenue nationwide climbed 1.6 percent year-on-year, reaching CNY6.69 trillion (USD932.8 billion), according to the Ministry of Finance. Of the 28 provincial-level regions that have disclosed their fiscal data so far, 24 reported revenue growth.

However, in terms of expenditure, of these 28 provincial-level regions, 24 saw spending rise. The national local general public budget expenditure expanded 2.6 percent over the period to CNY12.13 trillion (USD1.7 trillion), the ministry said.

Thanks to growth in non-tax revenue, local finances showed a mild recovery in the first half, said Wang Zhenyu, dean at Liaoning University's local government finance research institute. Local fiscal revenue should continue to climb in the second half, with fluctuations expected in the third quarter. The situation needs to be closely monitored and fiscal policies should be strengthened in a timely manner.

Northeastern Jilin province posted the highest growth in revenue from tax and non-tax income at 16.4 percent over the period, followed by the Xizang Autonomous Region with 11.7 percent. But most provinces recorded only modest growth. For example, although southeastern Jiangsu and Zhejiang provinces as well as Shanghai are among the biggest earners, their revenue gains were just 1.1 percent, 0.3 percent and 0.2 percent, respectively.

Thanks to the monetization of local assets into government coffers, income from the paid use of state-owned resources more than doubled in the first six months year on year in Jilin, surging by 109.2 percent and contributing additional earnings of over CNY10 billion (USD1.3 billion). 

However, tumbling coal prices since the beginning of the year led to a drop in tax payments from related companies. Local fiscal revenue in the coal-mining regions of Shaanxi, Shanxi and Qinghai provinces as well as the Inner Mongolia Autonomous Region slumped 7.2 percent, 6.3 percent, 2.3 percent, and 1.1 percent, respectively, over the period.

To ease the strain on budgets, local governments are working to boost revenue by strictly enforcing lawful tax collection, making better use of idle assets and resources, and seeking more support from the central government. At the same time, they are cutting non-essential spending and strictly limiting budget increases.

Under the current system, local governments mainly rely on income from land sales, environmental protection taxes, as well as a share of value-added tax, corporate income tax and personal income tax. The central government, meanwhile, gets most of its revenue from tariffs, consumption taxes and the taxes it shares with local governments.

Editor: Kim Taylor