Fiscal revenue growth decelerates as economy slows

China's national fiscal revenue rose 13.1 percent year-on-year to 2.09 trillion yuan (330.27 billion U.S. dollars) in the first two months as the economy slows, the Ministry of Finance said Monday.

The figure was considerably lower than 24.8 percent for the entire of last year, projecting risks of further drops in the following months, said Jia Kang, director of the ministry's Finance Institute.

The nation's fiscal revenue growth rate fell quarter after quarter last year, as China's economic growth slowed to 9.2 percent last year from 10.4 percent in 2010, due to falling external demand and government control measures to contain inflation.

Jia attributed the decrease during the first two months to the poor economic climate and structural factors such as a slowdown in the property sector.

Specifically, the slowdown was caused by a combination of factors, including slowing industrial production, easing price growth, structural tax reduction, as well as sagging property and stock transactions, the ministry said in a statement.

Of the January-February fiscal revenue, the central fiscal revenue rose 11.3 percent from a year earlier to 1.06 trillion yuan, while local governments collected 1.03 trillion yuan, up 15 percent, the ministry said.

Of the total, tax revenue increased 9.5 percent year-on-year to 1.85 trillion yuan during the period, and non-tax revenue surged 51.1 percent to 241.69 billion yuan, the ministry said.

In the first two months, the country's value-added tax (VAT) revenue climbed only 1.9 percent from one year earlier to 445.62 billion yuan, because of slower industrial production, mild price hikes and government tax reduction efforts, the ministry explained.

The industrial value-added output, which measures the final output value of industrial production, eased to 11.4 percent year-on-year in the first two months, down from 12.8 percent in December last year, official data showed.

Meanwhile, the Producer Price Index, which measures inflation at the wholesale level, grew only 0.4 percent year-on-year during the period, compared with 6.9 percent last year, according to official data.

As a result, VAT from sectors of oil products, steel products, general equipments, automobiles, and wholesale all dropped, the ministry said.

Furthermore, revenue from personal income tax fell 3.9 percent from a year earlier to 140.98 billion yuan in the first two months, as the country last year raised the monthly tax exemption threshold from 2,000 to 3,500 yuan.

Revenue from turnover tax increased 5.9 percent year-on-year to 293.5 billion yuan during the period, with that from the property sector down 22.7 percent due to sluggish sales.

Stamp duty on securities transactions dropped noticeably, down 37 percent to 4.71 billion yuan.

The growth of the country's fiscal expenditure accelerated to 32.8 percent in the first two months, in comparison to 21.2-percent growth last year, the ministry added.

The total fiscal spending stood at 1.39 trillion yuan, of which local governments spent 1.16 trillion yuan, up 34.5 percent from a year earlier.

Of major subcategories, the spending aimed at improving communications and transportation increased the most, up 83.4 percent, followed by science and technologies (79.8 percent), energy-saving and environmental protection (78 percent), and housing (73.5 percent).

Bai Jingming, a researcher with the ministry, forecast that fiscal incomes will decrease while spending will climb this year, citing rising uncertainties in economic growth, and effects of shrinking foreign trade, slower price growth and government policies such as structural tax reduction and property controls.