Capital expenditure frozen as cash moved into social projects
China's national expenditure was nearly flat in May as the government shifted money from overheated sectors such as construction into social projects including developing food resources.
Expenditure grew by 1.9 per cent year on year in May to 172.1 billion yuan, while investment in capital construction projects dropped 15.4 per cent, according to government data.
In the first five months, revenue jumped 32.4 per cent to 1.19 trillion yuan, while expenditure rose 13.8 per cent to 832.3 billion yuan. That left the government with a surplus of 365 billion yuan.
Finance Minister Jin Renqing said the central government would provide more funds to areas such as agriculture, forestry, water resources, social security, culture, education, sciences and health, according to state media.
'I don't think total spending will drop. It's more of a reallocation of spending to other areas,' HSBC China economist Qu Hongbin said.
Beijing is attempting to strike a balancing act between cutting off money to property, construction and other overheated sectors and preventing a sharp drop in economic activity.
