China's fiscal situation 'extremely severe with risks', says ex-finance minister Lou Jiwei
Lou warned that China's economic growth and revenue will remain stagnant for next five years, with no spending cuts and fiscal situation is “extremely severe."
- World News
- 2 min read
China’s fiscal situation is “extremely severe with risks and challenges”, a former finance minister Lou Jiwei warned at a state pass conference. He held aggressive US stimulus policies, ageing Chinese population and mounting government debt, and slump in the economic growth due to the pandemic as the reason. Following China’s political meeting to discuss their annual legislative session, Lou said that the rebound for china’s fiscal revenue was yet to be ‘consolidated’, as the country’s expenditure rose 2.8 percent in the last quarter of 2020 and fiscal revenue fell 3.9 percent due to the COVID-19 pandemic.
According to China’s state-run press, South China Morning Post (SCMP), Lou warned that Beijing’s economic growth and revenue will remain stagnant for the next five years, with no spending cuts. “The fiscal difficulties are not only a near-term or short-term issue, but also will be serious in the medium term,” news agency ANI quoted the minister as saying. He added, that the government has financial challenging laying ahead of it, as China's National People's Congress (NPC), the country's legislature, and the Chinese People's Political Consultative Conference (CPPCC), the country's top political advisory body, prepare for the annual gathering.
Advertisement
Fiscal revenue down by 5.3 percent in 2020
In the fourth quarter, China’s fiscal revenue indicated a slight surge as it accelerated to 5.5 percent, from 4.7 percent the previous quarter, according to China’s finance ministry, but overall was down by 5.3 percent in the year 2020. The fiscal revenue summed up to about 16.95 trillion yuan (2.59 trillion US dollars) in the first 11 months of 2020, when the pandemic hit.
Beijing is expected to cut back fiscal stimulus, China’s state press macroeconomy, monetary and fiscal policy expert, Orange Wang claimed in a report. He added that the Chinese government must focus on minimizing the debts, or else the country’s fiscal revenue would strike a ‘very low’ level in the next 5 years to come. “The fiscal difficulties are not only a near-term or short-term issue, but also will be serious in the medium term,” said Lou, in an ANI report, who has been Beijing’s Finance Minister between 2013 to 2016.