"China's Fiscal Deficit Hits Record High This Year... Impact of COVID-19 and Real Estate Slump"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] China's fiscal deficit is expected to reach a record high this year. The increase in costs due to the zero-COVID policy and the real estate market downturn are cited as the main causes.

On the 21st, Bloomberg analyzed data released by China's Ministry of Finance and found that China's fiscal deficit from the beginning of this year through last month reached 7.705 trillion yuan (approximately 1,428 trillion won).

This deficit is more than double that of the same period last year and larger than the annual fiscal deficit in 2020 when the COVID-19 pandemic began.

Bloomberg explained that government spending increased due to the significant rise in costs for testing and quarantine measures under the zero-COVID policy, as well as large-scale tax refunds implemented early this year to stimulate the economy.

On the other hand, revenue from land sales, which accounts for a large portion of government income, sharply declined due to the real estate market downturn, expanding the fiscal deficit.

Last month, the Chinese government's land sale revenue was 715 billion yuan (approximately 132 trillion won), up from 552 billion yuan (approximately 102 trillion won) the previous month, but about 13% lower compared to the same period last year.

Fiscal expenditure through November reached 22.7 trillion yuan (approximately 4,182 trillion won), a 6.2% increase compared to the same period last year.

Total fiscal expenditure for this year is expected to reach 26.3 trillion yuan (approximately 4,846 trillion won), which is 1.7 trillion yuan (approximately 313 trillion won) more than last year.

Bloomberg assessed that although costs for testing and similar measures are expected to decrease following the recent easing of the zero-COVID policy, healthcare expenses will inevitably rise for the time being due to an increase in confirmed cases, and the real estate market downturn is likely to continue, making it difficult to reduce the fiscal deficit.

This content was produced with the assistance of AI translation services.