China ramps up spending to support slowing economy

Thursday, 12 June 2014 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: China’s fiscal spending jumped 24.6% in May from a year earlier, the Finance Ministry said, highlighting intensifying government efforts to fortify a slowing economy.

Total fiscal spending in May rose to 1.3 trillion yuan ($ 208.75 billion), quickening sharply from a 9.6% rise in the first four months of the year. Central government spending also rose 15.8% in May from a year earlier while local government expenditure soared 26.9%, the ministry said on Wednesday. The higher spending comes as the world’s second-biggest economy got off to a soft start to the year, growing at its slowest pace in 18 months in the first quarter. The worrying loss of momentum rattled global markets, although more recent data suggested the economy may be stabilising. China’s Central Bank recently cut the level of deposits for banks with sizeable lending to the farming sector and small firms – the latest step to spur growth. The Government has acted since April to steady growth through some focused measures, characterising it as policy fine-tuning. Chinese leaders have ruled out any large stimulus as the country is still nursing the hangover from the 4 trillion yuan ($ 640 billion) stimulus implemented during the global crisis in 2008-09, which resulted in piles of local government debt. The ministry has recently urged state agencies and local governments to quicken budget spending, warning that they risked losing 2014 budget funds not allocated by the end of June. The ministry did not provide a spending figure for April alone. Fiscal revenues rose 7.2% in May from the same month last year, slowing from a 9.2% rise in April. The ministry attributed the slower revenue growth in May to the slowdown in the economy and falling property transactions.