China’s coronavirus stimulus response could be limited as 2019 fiscal revenue grew at slowest pace since 1987
- Fiscal revenues rose 3.8 per cent in 2019 compared to a year earlier, the Ministry of Finance said on Monday, slowing from an increase of 6.2 per cent in 2018
- The fall in fiscal revenues will restrict Beijing’s ability to boost spending in 2020 to keep growth on track amid the coronavirus outbreak
China’s fiscal revenues in 2019 grew at the slowest pace since 1987 after Beijing’s tax cuts in response to the country’s economic slowdown, which will limit the government’s ability to boost spending to offset the effects of the coronavirus outbreak.
Chinese fiscal revenues rose 3.8 per cent in 2019 compared to a year earlier, the Ministry of Finance said on Monday, slowing from an increase of 6.2 per cent in 2018. It was the slowest growth rate since 1987 when China reported a 3.6 per cent rise.
Within total revenues, tax revenues rose a mere 1.0 per cent last year to 15.8 trillion yuan (US$2.3 trillion) – due in large part to a 25 per cent drop in personal income tax revenues resulting from the tax cut enacted in 2018. Value-added taxes, the largest tax item, rose 1.3 per cent to 6.2 trillion yuan (US$885 billion), again limited by a tax rate cut for many businesses earlier last year.
At the same time, China’s fiscal spending climbed 8.1 per cent in 2019 from the previous year, outpacing economic growth as policymakers sought to ward off a sharper slowdown in the economy amid the US trade war.