15 Dec 2015
China: Fiscal policy remains accommodative - ING
FXStreet (Delhi) – Prakash Sakpal, Economist at ING, suggests that the China’s fiscal data indicate a more pronounced growth slowdown than that portrayed by GDP and the good news is that fiscal policy remains accommodative.
Key Quotes
“The Ministry of Finance yesterday released the budget data for November. General public expenditure growth slowed to 25.9% YoY in November from 36.1% in October. The last quarter of the year typically is the strong growth quarter for spending. At 18.9% YTD spending growth has more than doubled from the pace in 2014.”
“Government revenue growth accelerated to 11.4% YoY in November from 8.7% in October, putting year-to-date growth at 8%, little changed from 2014. Deeper PPI deflation, -5.2% YTD in November vs. -1.9% in 2014, has put a dent in the VAT collection, the largest source of revenue with 21% share in total revenue in 2014. The VAT revenue growth has slowed to 1.06% YTD from 7.1% in 2014.”
“The fiscal data indicate a more pronounced growth slowdown than that portrayed by the GDP. They also indicate that fiscal policy is in play to halt the growth slowdown. The policy is effective; the 2.5ppt cut in the auto purchase tax from October 1 boosted sales growth to 11.8% YoY in October and further to 20% in November from 0.3% average growth in the first nine months of the year.”
Key Quotes
“The Ministry of Finance yesterday released the budget data for November. General public expenditure growth slowed to 25.9% YoY in November from 36.1% in October. The last quarter of the year typically is the strong growth quarter for spending. At 18.9% YTD spending growth has more than doubled from the pace in 2014.”
“Government revenue growth accelerated to 11.4% YoY in November from 8.7% in October, putting year-to-date growth at 8%, little changed from 2014. Deeper PPI deflation, -5.2% YTD in November vs. -1.9% in 2014, has put a dent in the VAT collection, the largest source of revenue with 21% share in total revenue in 2014. The VAT revenue growth has slowed to 1.06% YTD from 7.1% in 2014.”
“The fiscal data indicate a more pronounced growth slowdown than that portrayed by the GDP. They also indicate that fiscal policy is in play to halt the growth slowdown. The policy is effective; the 2.5ppt cut in the auto purchase tax from October 1 boosted sales growth to 11.8% YoY in October and further to 20% in November from 0.3% average growth in the first nine months of the year.”