2024-11-07-国家金融与发展实验室-持续发挥_扩张性_财政政策作用_改善财政收支状况——2024Q3中国财政运行_23页_6mb

China Fiscal Running Summary - NIFD Quarterly Report, Q3 2024

Main Overview

The National Institute of Financial Development (NIFD) published its Q3 2024 Quarterly Report on China's fiscal running, authored by Wang Hongju and co-contributors. The report tracks fiscal developments, highlighting challenges and recommendations for expansionary fiscal policy. key areas include general public budget, government funds, disparities between budgets (referred to as "两本账"), macroeconomic issues, and policy advice. Overall, the fiscal situation showed slight marginal improvements in some metrics but significant pressures elsewhere.

Key Findings

General Public Budget

• Q3 2024: General public budget revenue decreased, but at a slower pace than Q2, with a 0.8% decline. Expenditure increased marginally by 1.9%, indicating a slight shift toward spending expansion. However, a larger funding gap persisted.
• Trends: Seasonal lows in revenue continue; central expenditure decreased, while local growth was modest. This reflects ongoing fiscal constraints.

Government Funds

• Pressure intensified: Revenue dropped sharply by 27.9%, driven by reduced land sales revenue. Expenditure rose due to expanded support policies for economic stimulation.
• Implications: Widening deficit and reliance on fiscal measures to address economic stagnation.

Fiscal Imbalance

• The combined deficit of general public budget and government funds increased, with the ratio to nominal GDP reaching 7.2%, higher than previous years.
• Local budget challenges: Faster-growing deficits strain finances, exacerbated by weak land revenue and delayed spending.

Macroeconomic Contradictions

• Inward demand remains the primary economic issue, with weak consumption, investment, and credit demand noted.
• Labor market tough: High unemployment, especially among youth, with persistent structural issues.
• Monetary environment tight: Low inflation, negative PPI growth, and constrained monetary supply hinder economic activity.
• Fiscal circulation bottlenecks: Revenue and spending progress lagged, contributing to inefficiencies.

Policy Recommendations

• Advocate for active fiscal policy to bolster demand and economic expansion.
• Suggest increased government bond issuance and targeted spending reforms to manage debt risks and stimulate growth.
• Propose deeper fiscal reforms, including better budget management and wealth-based taxation systems, to promote sustainable development.