China Records Drop in Fiscal Revenue Growth
Created: 2012-09-11 15:28 EST
Latest data released by China’s Ministry of Finance today showed that China’s August fiscal revenue growth has slowed to 4.2%. That’s down from 8.2% in July.
The slower growth is mainly due to the country’s sluggish economy.
Fiscal revenue, in particular tax revenue, is an indicator of economic performance. A drop in tariffs, lower corporate profits and structural tax cuts have contributed to the slower fiscal revenue growth.
With the drop in fiscal revenue, Chinese authorities also pulled back on fiscal spending. It grew by 12% in August year on year, compared to 37% in July.
If the imbalance between fiscal spending and revenue continues, some experts are worried whether China’s central authorities will maintain spending on public service like education, social security, public health and housing support.
There have been expectations for Chinese leaders to inject more money into the economy, as global and domestic demands slow. Last week authorities announced plans to roll out more than 150 billion dollars-worth of infrastructure projects.