Fiscal policy is expected to work more actively to underpin growth this year with an optimized fiscal spending structure and increased fiscal spending, according to experts.
The Ministry of Finance announced last year's fiscal revenue figures on Monday. The ministry said that China's fiscal revenue increased by 9.1 percent year-on-year in 2022 to 20.37 trillion yuan $3.02 trillion after excluding the impact of value-added tax credit rebates.
Fiscal expenditure in the country went up 6.1 percent last year, according to the ministry. After excluding the impact of VAT credit rebates, total VAT revenue for 2022 was 4.87 trillion yuan, up 4.5 percent. Consumption tax revenue was 1.67 trillion yuan, up 20.3 percent from a year ago.
Fiscal revenue grew 61.1 percent in December, while fiscal expenditure increased 3 percent.
In 2022, the total income from the general public and government fund budgets came in at 28.2 trillion yuan, a decline of 6.3 percent from a year earlier.
The MOF said that fiscal policy will work more actively this year to support growth. Fiscal spending will be increased while more efforts will be put in place to catalyze the role of special local government bonds to drive growth. The structure of fiscal spending will be optimized to catalyze social investment and boost consumption.
China will expand fiscal expenditures in 2023, set a reasonable amount of special local government bonds to boost investment, and improve tax and fee policies to support businesses facing difficulties, the ministry said.
On Tuesday, Xiong Yuan, chief macro analyst at Guosheng Securities, said that efforts on the fiscal policy front will be intensified with improved efficiency this year. He expects to see more leveraging on the fiscal policy front, estimating that the deficit to GDP ratio will exceed 3 percent and the total amount of special local government bonds will be close to 4 trillion yuan.
We believe that maintaining economic growth stable will be the top priority for fiscal policy this year. If the economic recovery continues to gain momentum, tax revenue will start to pick up and improve. Pressure on fiscal spending will be removed and the policy of VAT credit refunds may exit, according to a note on Tuesday by Xiong.
He said that tax and non-tax income have shown significant improvement in December, and that fiscal revenue in December has shown signs of improvement. Land and property taxes have turned positive and negative, yet still remain at the low level, showing that the real estate sector is still in a gradual recovery. In December, the growth rate of fiscal spending slowed, with infrastructure and livelihood-related fiscal expenditure slowing. Fiscal spending on health and medical care remained high in December, due to the COVID-19 pandemic and the peak of the infection in December.
The state taxation administration said on Tuesday that the country's tax refunds, tax and fee cuts and deferrals had exceeded 4.2 trillion yuan in 2022, as well as tax and fee cuts and deferrals. In 2022, the total tax and fee income stood at 31.7 trillion yuan.
Gao Ruidong, chief macroeconomist at Everbright Securities, said this year that the government will not rely heavily on debt and is likely to turn towards policy finance for infrastructure funds because of the government's commitment to keep debt under control.