China’s fiscal spending fell last month, a rare contraction that points to slower economic growth toward the end of the year.
Spending was down 8% from a year ago, reversing a 1.7% increase in September, as a majority of this year’s expenditure was incurred in earlier months, the Finance Ministry said Friday.
“Now that the government is sure to hit the economic growth target this year, local governments can sort of take a breather,” said Liu Xuezhi, an economist at Bank of Communications.
Investment growth, which started slowing in September, could moderate further over the rest of this year, he said.
Central-government spending dropped 6% in October, while local governments’ expenditure declined 8.5%, the ministry said.
The country’s fiscal revenue increased 5.4%, compared with a 9.2% rise in September, the ministry said.
For the January-to-October period, national fiscal spending rose 9.8% from a year ago, while revenue increased 9.2%, the Finance Ministry said.
The government has projected fiscal spending and revenue to grow 6.5% and 5%, respectively, for 2017, according to the budget.
Beijing’s plan is for the economy to grow at least 6.5% this year. Gross domestic product expanded 6.9% in the January-September period, official data showed.
The government might step up fiscal spending next year because of an expected cooling in property investment, said BoCom’s Mr. Liu.
Source: Dow Jones