China's July fiscal spending pace slows, but revenues rise

Workers replace railway tracks at a station in Jinan, China July 12, 2017. REUTERS/Stringer

BEIJING (Reuters) - China’s fiscal spending rose at a slower pace in July due mainly to larger expenditure earlier, but a government-led infrastructure push has kept spending brisk this year.

Fiscal spending in July rose 5.4 percent from a year earlier while revenue increased 11.1 percent, the Ministry of Finance said in a statement on its website on Friday.

July’s growth rate dropped sharply from 19.1 percent in June, although revenue growth rose from 8.9 percent in that month, the ministry said.

The government attributed the slowdown in July spending mainly to significant expenditure earlier.

Government spending in the first seven months of the year rose 14.5 percent on year, while revenues increased 10 percent.

Government-led stimulus has been a major driver of economic growth over the past years in the world’s second-largest economy, but the pump-priming has also been accompanied by runaway credit growth and created a mountain of debt.

But the government has kept its budget deficit at 3 percent of gross domestic product (GDP) for 2017, the same as last year, and pledged to clamp down on risks associated with local government debt.

The Chinese economy has defied expectations for a slowdown and expanded at a solid pace in the first half supported by construction projects, though the broad consensus is for growth to cool slightly in the coming quarters as the authorities continue to crack down on financial risks.

Reporting by Beijing Monitoring Desk and Sue-Lin Wong; Editing by Jacqueline Wong