China spends less as income drops

Agencies and staff reporter

China's fiscal revenue fell 2.6 percent in the first seven months of 2024 from a year earlier, narrowing slightly from a 2.8 percent slide in the first half, finance ministry data showed yesterday, as the economy struggles for a pick-up in growth.

Meanwhile, China's broad budget expenditure contracted as income from land sales for local governments fell at a record pace, according to Bloomberg calculations based on data released by the ministry.

The combined spending in the general public budget and government fund accounts was about 19.7 trillion yuan (HK$21.6 trillion) in the first seven months, down 2 percent from the same point in 2023, the calculations showed.

Behind the decline was a 8.9 percent decrease in land-related expenditure including payments for primary land development and compensation for existing rural infrastructure in preparation for a potential sale.

Local governments have been cutting spending as their budgets come under strain from a severe housing downturn that has made developers reluctant to purchase land.

The property fallout on public finances is becoming increasingly evident on the balance sheets of indebted local governments, with their revenues from land sale in July shrinking more than 40 percent year on year to 250 billion yuan, according to Bloomberg calculations, the sharpest fall since comparative data became available in 2016.

In money markets, the yuan extended its rise to close at 7.1188 against the US dollar to advance towards an eight-month high.