Fiscal Revenue Grows Slightly in First Two Months, Fiscal Expenditure Ramps Up to Stabilize Economy

What is the impact of proactive fiscal policies on the economy?

“Real money” fiscal data has been released, reflecting a more proactive fiscal policy this year to stabilize the economy.

On March 19, the Ministry of Finance announced the fiscal revenue and expenditure for the first two months of this year. During this period, the national general public budget revenue was 4.4154 trillion yuan, a year-on-year increase of 0.7%. Meanwhile, the national general public budget expenditure was 4.6706 trillion yuan, a year-on-year increase of 3.6%.

In the first two months, the growth rate of national general public budget expenditure significantly outpaced revenue growth, and also exceeded last year’s full-year expenditure growth rate (1%), indicating that a more proactive fiscal policy is taking effect early this year to promote steady economic operation.

Fu Linghui, spokesperson for the National Bureau of Statistics, recently stated at a State Council Information Office press conference that despite international uncertainties and rising external risks, especially geopolitical conflicts, under the strong leadership of the Party Central Committee, various regions and departments are earnestly implementing more proactive macro policies. They are focusing on leveraging the combined effects of existing and new policies, leading to rapid growth in production supply in January and February, steady expansion of domestic demand, overall stability in employment and prices, and the cultivation and strengthening of new productive forces. In summary, the operation in January and February can be described as a strong start and a good beginning.

In the first two months, national general public budget revenue saw a slight increase, better than the same period last year (-1.6%). Tax revenue, which is most closely related to the economy, remained basically flat compared to the same period last year.

According to the Ministry of Finance, in the first two months, the national tax revenue was 3.6393 trillion yuan, a slight increase of 0.1% year-on-year; non-tax revenue was 776.1 billion yuan, up 3.4%.

Looking at major tax categories in the first two months, the largest tax, value-added tax (VAT), maintained steady growth (4.7%), mainly driven by growth in industrial services and narrower declines in producer prices. The rapid growth of foreign trade imports at the beginning of the year also contributed to double-digit increases in import VAT, consumption tax, and tariffs. Active stock market trading and increased transaction volumes led to a 1.1-fold year-on-year increase in securities transaction stamp duty. Due to the phased reduction of vehicle purchase tax incentives for new energy vehicles, vehicle purchase tax revenue also grew by double digits.

However, some tax revenues declined, pulling down overall tax revenue growth.

The three main tax types—corporate income tax, domestic consumption tax, and personal income tax—all declined. Specifically, due to a decrease in cigarette consumption tax, domestic consumption tax revenue fell 6.2% year-on-year in the first two months. Some companies faced difficulties, leading to lower profits and a 3.9% decrease in corporate income tax revenue, though the decline was narrower than last year. Additionally, because the Chinese New Year (mid to late February) was later than last year, personal income tax from year-end bonuses and dividends, which was paid earlier last year, was delayed, causing a 6.9% decrease in personal income tax revenue in the first two months.

Furthermore, affected by the ongoing downturn in the real estate market, related revenues such as deed tax and land value appreciation tax also saw significant declines.

From an industry perspective, tax revenues in sectors like equipment manufacturing and modern services continued to perform well in the first two months. For example, tax revenue from the computer and communication equipment manufacturing sector increased by 9%, electrical machinery and equipment manufacturing increased by 9.5%, scientific research and technical services grew by 15.8%, and cultural, sports, and entertainment industries increased by 9.8%.

Besides the national general public budget revenue, government funds mainly derived from land sales are also important sources of government revenue. However, due to ongoing adjustments in the real estate market, land sale income has continued to decline, and government fund revenues have decreased this year.

Data from the Ministry of Finance show that in the first two months, the total revenue of the national government fund budget was 536.3 billion yuan, a year-on-year decrease of 16%. Of this, the local government fund budget revenue was 450.1 billion yuan, down 19.2% year-on-year, with state land use rights transfer income at 354.7 billion yuan, down 25.2%.

Land transfer income at the local level in the first two months fell more sharply than last year’s decline of 15.7%, and also exceeded the full-year decline of 14.7%.

Overall, the broad fiscal revenue in the first two months was relatively sluggish. However, supported by moderate government borrowing and other measures, fiscal expenditure maintained a certain level of strength. Notably, the national general public budget expenditure was front-loaded, with key areas receiving good support.

Data from the Ministry of Finance indicate that among the main categories of the national general public budget expenditure, social security and employment expenses reached 9.279 trillion yuan, an increase of 8.6%. Health and medical expenses totaled 4.119 trillion yuan, up 17.3%. Livelihood-related expenditures were effectively protected.

Influenced by the issuance of local government special bonds, the total government fund budget expenditure in the first two months was 13.174 trillion yuan, up 16% year-on-year. This far exceeds the revenue decline of 16%, demonstrating the proactive implementation of fiscal policies.