China Maintains Austerity Amid Slowdown

Public spending in China declined by 11.9% year-on-year in June, marking the largest drop since October, as the government seeks to tighten fiscal policy amid slowing economic growth. Despite the decrease in spending, public revenues increased by 1.8%, resulting in a deficit of 4.57 trillion yuan (approximately $675 billion) in the first half of the year. This deficit had little impact on the economy, which experienced further slowdown in the second quarter. The government reaffirmed its commitment to continue active fiscal policies, focusing on supporting infrastructure, education, and healthcare. Meanwhile, China continues to issue infrastructure financing bonds and expand credit instruments to stimulate the economy and mitigate the effects of the real estate downturn. Institutions expect the government to pursue further easing measures to support the targeted growth rate of between 4.5% and 5%, though challenges remain in financing major projects, which will continue to be a top priority for government spending.

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