Economics
China Budget Deficit Hits Record Due to Tax Rebates, Covid Pain
- Broad funding shortfall was nearly 3 trillion yuan in Jan.-May
- Land sales continue to drop, adding to the financial squeeze
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China’s broad budget deficit in the first five months of the year ballooned by almost a trillion yuan to the worst on record as spending soared due to Covid outbreaks and tax breaks to stimulate the economy caused income to drop.
The government took in a combined 10.9 trillion yuan ($1.6 trillion) in general and government fund revenues in January to May, but that was far exceeded by the 13.8 trillion yuan it spent in the period. The 2.9 trillion yuan deficit, which covers the budgets for all levels of government, compares to a small surplus at the same point last year and is almost 43% bigger than in 2020, according to Bloomberg calculations based on data from the Ministry of Finance.