Economy Jun 19

Fiscal revenue slides further in China

Reduced tax receipts show economic hit from coronavirus lockdown still ripples through economy 

Fiscal revenue slides further in China
Not working: The coronavirus’ hit on China’s economy and employment has reduced tax receipts.

(ATF) Chinese fiscal revenues fell 14% in the first five months of the year as the paralysing effect of coronavirus on the economy continued to be translated into depressed tax receipts.  

The latest data are only a slight improvement on the 14.5% year-on-year drop in the first four months and 14.3% in the first quarter.

China’s fiscal revenue totalled 7.8 trillion yuan ($1.1tn) during the January-May period, according to data released by the Ministry of Finance. In May alone, China's fiscal revenue fell 10%, narrowing from a 15% decrease in April.

Tax revenue totalled 6.7tn yuan, down 15% while revenue from value-added tax, the largest fiscal revenue source in the country, fell 22%.

Value-added tax revenue from the industrial and commercial sectors in May has recovered to almost the same level of the corresponding period last year, reversing a 33.5% drop for the January-April period.

A breakdown showed the central government collected nearly 3.6tn yuan in fiscal revenue in the first five months, down 17%, while local governments saw revenue drop 10.4% to 4.2tn yuan.

The falling fiscal revenue was partly a result of tax and fee reductions to mitigate the impact of the epidemic on the economy, with sectors hit hardest by the epidemic, such as film and aviation industries, being given particular fee cuts in the reporting period.

Spending drops

Thursday's data also showed the country's fiscal spending in the first five months fell 2.9% from a year earlier to 9.03tn yuan.

The ministry said with China's economy steadily recovering, it expects major economic indicators to keep improving, while the decline in fiscal revenue would continue to narrow. 

Meanwhile, non-financial outbound direct investment (ODI) fell 1.6% year-on-year in the first five months of 2020, according to the Ministry of Commerce.

ODI in 157 countries and regions stood at 296bn yuan, said ministry spokesperson Gao Feng at a press conference Thursday.

Chinese companies increased investment in Belt and Road countries by 16% to $6.53bn.

China’s ODI mainly went to sectors including leasing and business services, wholesale and retail as well as manufacturing, according to the ministry.

The value of new contracted projects overseas reached 601.9 billion yuan, up 14.4%.

During the period, the number of newly signed overseas projects each with a contract value exceeding $50 million came in at 319, up 32 from the same period a year earlier. The total contract value of those projects amounted to $70.57bn, accounting for 82.3% of the total of the newly signed contracts. 

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