(Bloomberg) — China’s budget deficit climbed to a fresh record in the first half, highlighting intensified government efforts to shore up domestic demand as Donald Trump’s tariffs reduce exports to the US.
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The broad fiscal gap reached 5.25 trillion yuan ($733 billion) in January-June, according to Bloomberg calculations based on data released by the Finance Ministry during a briefing on Friday. The shortfall widened 45% from a year earlier.
Chinese authorities have front-loaded fiscal stimulus to boost infrastructure investment and household consumption, aiming to support growth in the face of a sluggish property market and mounting deflationary pressures. Despite a recent tariff truce, exports to the US have contracted as average American levies on Chinese goods remain about 30 percentage points higher than last year.
Government spending and resilient shipments to markets other than the US underpinned China’s growth in the first half, with gross domestic product expanding 5.3% — well above the official annual target of around 5%.
Top leaders are set to convene toward the end of this month to discuss economic policy for the rest of the year, just as Chinese and US negotiators prepare to meet next week for another round of trade talks. Their outcome will be key to deciding whether more stimulus is needed.
Total expenditure increased 9% to 18.8 trillion yuan in the first six months from a year ago, the Finance Ministry’s numbers showed. That figure combines spending under the general budget, which mainly includes everyday outlays, with expenditure in the government fund budget, which is weighted more toward capital investment projects.
Total income in China’s two main fiscal books fell 0.6% on year to 13.5 trillion yuan in the first six months. Tax revenue declined 1.2%.
Government income from selling land continued to contract, dropping 6.5% in the first half of the year in reflection of persistent property market woes.
–With assistance from Yujing Liu and James Mayger.
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