China’s fiscal revenue up 3.2% in June as economy rebounds

(C) Reuters. A man walks in front of Lujiazui financial district in Shanghai

BEIJING (Reuters) – China’s fiscal revenues rose 3.2% in June from a year earlier, reversing a 10% drop in May and returning to expansion for the first time this year, the finance ministry said on Friday, in line with a recovery in the economy.

Fiscal revenues have been gradually recovering in the second quarter after a deep decline in the first three months, ministry official Liu Jinyun told a briefing.

China’s economy returned to growth in the second quarter after a deep slump at the beginning of the year, but weak demand underscored the need for more policy support for the recovery after the shock of the novel coronavirus crisis.

For the first half, fiscal revenues fell 10.8% from a year earlier to 9.6176 trillion yuan, while fiscal spending fell 5.8% to 11.6411 trillion yuan, the ministry said.

Tax revenues fell 11.3% in the first half, while non-tax revenues were down 8%, it said.

China has issued 720 billion yuan ($102.89 billion) in special treasury bonds as of July 16, accounting for 72% of the planned issuance that could be completed by the end of July, Liu said.

In May, the government said it would issue 1 trillion yuan in special treasury bonds to support employment, expand consumption and investment.

The government will also let local governments issue 3.75 trillion yuan worth of special bonds to fund investment projects.

The cabinet said this week that local governments had issued 2.24 trillion yuan in special bonds by mid-July, of which 1.9 trillion yuan had been spent.

Funds raised from local government special bonds must be used for projects with certain returns and cannot be used to pay wages or pensions, finance ministry official Wang Kebing told the briefing.

The ministry had issued a fourth batch of a local government special bond quota of 1.26 trillion yuan, on top of previous tranches totalling 2.29 trillion yuan, Wang said.

The government will prevent risks from local government debt and will not relax controls due to the coronavirus, Wang said.

($1 = 6.9976 yuan renminbi)