Last year, China's government expenditure increased at the slowest rate in nearly two decades, suggesting limited fiscal support for an economy that has lost speed drastically in recent months.
According to Vice Finance Minister Xu Hongcai, general fiscal expenditure was 24.63 trillion yuan ($3.9 trillion), up 0.3% from the previous year. This was the slowest rate since 2003.
At the same time, the government received 20.25 trillion yuan in general fiscal revenue last year, a 10.7% increase over the previous year, according to Xu. This resulted in a 4.4 trillion yuan deficit, the smallest since 2018.
That revenue exceeded the government's expectation in last year's budget, which will "give funding support for us to sustain the strength of expenditure this year and grant additional financial help to governments at lower levels," Xu said.
A reduction in the amount of tax and fee cuts in 2021 increased income. The government gave 1.1 trillion yuan in cuts in 2021, which was less than half of the record-high 2.6 trillion yuan in cuts in 2020 or the 2.36 trillion yuan in tax cuts in 2019.
Last year's cuts included 225.9 billion yuan for manufacturing firms, Wang Daoshu, deputy commissioner of the State Taxation Administration, said on Wednesday. Cuts in 2022 will target smaller businesses and manufacturers, he added.
China's policymakers have shifted to a pro-growth stance in the face of a slump in the property market and a resurgence of Covid cases, which has weighed on spending. To combat the slowdown, the central bank has lowered interest rates and reduced the amount of cash that banks must keep in reserve.
Monetary easing, however, will have only a limited impact on spurring growth, with analysts urging the government to increase fiscal stimulus as well.