Analysis of China's Fiscal Revenue and Expenditure for January-February 2025

Analysis of China's Fiscal Revenue and Expenditure for January-February 2025

At the beginning of 2025, the fiscal landscape presents a complex and critical situation. According to data released by the Ministry of Finance, government fund budget revenue for January-February decreased by 10.7% year-on-year. Notably, revenue from state-owned land use rights declined by 15.7%. This significant negative growth trend has had a major impact on the overall fiscal framework. Despite the downward pressure on fiscal revenue, fiscal expenditure has shown strong momentum. In the first two months, national general public budget expenditure reached 45,096 billion yuan, an increase of 3.4% year-on-year, demonstrating the government's proactive stance in economic and social development.

From an expenditure perspective, there have been notable structural changes compared to 2024. Expenditures in key areas such as social security, education, science, culture, and health have seen rapid growth, far outpacing other sectors. Education expenditure amounted to 7,377 billion yuan, up 7.7% year-on-year, reflecting the government's commitment to continuous investment in education to enhance national quality and lay a foundation for long-term economic and social development. Science and technology expenditure reached 1,122 billion yuan, up 10.6%, indicating increased support for research and development to bolster the nation's core competitiveness in the context of innovation-driven development. Expenditure on culture, tourism, sports, and media reached 507 billion yuan, up 5%, contributing to the enrichment of cultural life and the prosperity of the cultural industry. Social security and employment expenditure amounted to 8,540 billion yuan, up 6.7%, further strengthening the social security system and ensuring public welfare and social stability. Healthcare expenditure reached 3,512 billion yuan, up 0.6%, continuing efforts to safeguard public health and improve medical services.

However, not all sectors saw increased expenditure. Urban and rural community expenditure amounted to 3,427 billion yuan, down 6.6%, and agriculture, forestry, and water expenditure reached 2,974 billion yuan, down 10.5%. These reductions may reflect optimized allocation of fiscal resources and policy adjustments in response to current economic conditions. Transportation expenditure reached 1,916 billion yuan, up 2.3%, maintaining stable development in transportation infrastructure and operations. Debt servicing expenditure amounted to 1,568 billion yuan, up 19.7%, highlighting the pressure on government debt management and the need for prudent financial planning to ensure timely repayment.

In terms of fiscal revenue, non-tax revenue grew by 11%, significantly outpacing tax revenue growth, which stood at -3.9%. Considering economic indicators such as the PPI for the first two months, corporate profitability has yet to see substantial improvement. Among tax revenues, performance varied across different tax categories. Domestic value-added tax reached 15,128 billion yuan, up 1.1%, indicating stable production and circulation but insufficient growth momentum. Domestic consumption tax reached 4,079 billion yuan, up 0.3%, reflecting steady conditions in related consumption sectors. Corporate income tax amounted to 9,113 billion yuan, down 10.4%, correlating with poor corporate profitability and underscoring operational challenges. Notably, individual income tax reached 4,134 billion yuan, up 26.7%, significantly outpacing other major tax categories, possibly due to changes in personal income structures and tax policy adjustments.

In summary, the fiscal revenue and expenditure for January-February 2025 are characterized by negative revenue growth, sustained strong expenditure, optimized expenditure structure, and uneven tax revenue growth. The government is actively adjusting fiscal policies to address complex economic conditions, ensuring public welfare, promoting key sector development, and tackling corporate profitability challenges to foster stable and healthy economic growth.