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China said the ratio of 2020 government debt-to-gross domestic product stood at 45.8 per cent, which was lower than the international redline of 60 per cent. Photo: Getty Images
EconomyChina Economy

‘Foundations’ of China’s economic rebound yet to be ‘consolidated’ as fiscal revenue fell in 2020

  • China’s fiscal revenue fell 3.9 per cent in 2020 from a year earlier, while expenditure rose 2.8 per cent, the finance ministry said on Thursday
  • However, growth in fiscal revenue accelerated to 5.5 per cent in the fourth quarter, from 4.7 per cent the previous quarter
China economy
Reuters
Reuters
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China’s fiscal revenue fell 3.9 per cent in 2020 from a year earlier, while expenditure rose 2.8 per cent, the finance ministry said on Thursday, underscoring the difficulties in government finances amid the coronavirus pandemic.

However, as the world’s second-largest economy bounces back from coronavirus-triggered paralysis, growth in fiscal revenue accelerated to 5.5 per cent in the fourth quarter, from 4.7 per cent the previous quarter, the ministry added.
China’s economy picked up speed in the fourth quarter, with growth beating expectations as it ended a rough coronavirus-striken 2020 in remarkably good shape and remained poised to expand further this year even as the global pandemic rages unabated.
The finance ministry expects tax and fee cut efforts last year helped reduce burdens on companies by more than 2.5 trillion yuan (US$386 billion), and pledged to continue implement reforms in value-added tax and personal income tax to maintain the necessary support to the economic recovery.
Some industries are still digesting the negative impact brought by the pandemic and the foundations of a steady economic rebound are yet to be consolidated
China’s finance ministry

“Some industries are still digesting the negative impact brought by the pandemic and the foundations of a steady economic rebound are yet to be consolidated,” said the ministry.

It added the ratio of 2020 government debt-to-gross domestic product stood at 45.8 per cent, which was lower than the international redline of 60 per cent.

Going forward, authorities will maintain a stable macro leverage ratio, balancing the needs of economic growth and risk control, said the finance ministry, adding that it will reasonably determine the size of government bonds to maintain an appropriate magnitude of spending.

It will firmly curb the increase in hidden local government debts and properly resolve the outstanding hidden debt issues, it said.

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