China’s fiscal revenue growth quickens as economy recovers

11:53 pm Wednesday, July 13th, 2022

BEIJING (Reuters) -China’s fiscal revenue growth accelerated in January-June from the first five months, the finance ministry said on Thursday, as the economy showed signs of a slow recovery in June after earlier lockdown-induced disruptions.

Fiscal revenues in the first half rose 3.3% from a year earlier, excluding the impact of value-added tax (VAT) credit rebates, quicker than a 2.9% rise in January-May, Xue Xiaoqian, an official at the finance ministry said during a press conference in Beijing.

Fiscal revenue in June alone grew 5.3% from a year earlier after adjusting for VAT credit rebates.

Xue said China’s fiscal revenues were expected to steadily rebound in the second half of this year as the economy improves.

Revenues from government land sales shrank 40.01% in June alone, according to Reuters’ calculations based on official data, widening from a 24.03% slump in May amid a property market downturn.

Fiscal revenues totalled 10.52 trillion yuan ($1.56 trillion) in the first half, in addition to 1.84 trillion yuan of VAT credit rebates.

Fiscal spending reached 12.89 trillion yuan in the first half, up 5.9% from a year earlier.

China has unveiled a raft of economic support measures in recent months, including issuing local government special bonds for infrastructure projects more quickly, to help revive an economy hurt by extensive lockdowns that began in late March.

Chinese local governments issued a net 3.41 trillion yuan of special bonds by end of June, a second ministry official Song Qichao said at the same press conference, part of a 2022 special bond quota of 3.65 trillion yuan.

Sources have told Reuters that China will issue a 2023 advance quota for local government special bonds in the fourth quarter, with the new quota likely bigger than the 1.46 trillion yuan announced a year earlier.

Data due on Friday is expected to show further signs of a modest economic improvement, with industrial output expected to pick up and retail sales to level off after months of contraction.

($1 = 6.7288 Chinese yuan renminbi)

(Reporting by Kevin Yao, Ellen Zhang and Stella Qiu; Editing by Christian Schmollinger and Jamie Freed)