China’s Fiscal Spending Drops for First Time in Seven Months

Chinese government spending in August declined for the first time in seven months, suggesting that the government may be running low on fiscal firepower to stabilize economic growth.

China’s total fiscal spending slipped 0.2% from a year earlier, after rising 3.5% in July, according to calculations by Wind based on Ministry of Finance data released on Tuesday.

Fiscal revenue was up 3.3% last month, after rising 1.8% in July, according to Wind.

To counter the impact of rising trade tensions and stoke sluggish domestic demand, officials front-loaded spending this year to encourage steady economic growth. These efforts included advancing local government bond issuance and accelerating spending on public projects. Fiscal spending grew over 10% in the first half of the year.

Over the January to August period, fiscal spending increased 8.8%, while government income climbed 3.2%, the finance ministry said.

Government spending on transportation and technology saw the fastest increases over the same period, up 16% and 15% respectively, the ministry said.

Revenue from personal incomes tax fell 30% in the first eight months, while export tax rebates rose 17%.
Source: Dow Jones