China's Sept fiscal spending quickens, land revenues fall

BEIJING: Growth in China's fiscal spending in September quickened to 9.1 percent from a year earlier, data showed on Tuesday, as the authorities try to smooth volatile public spending and keep the economy on an even keel.

But underscoring the cooldown in the world's second-biggest economy and its housing market, revenues that Chinese governments earned from selling land slumped 21.1 percent in September on a yearly basis.

Selling land to developers is a major source of income for China's regional governments, but this revenue stream has suffered this year as the country's falling home prices crimped demand for land among developers.

China's economy slowed in the third quarter to a level not seen since the global financial crisis, data showed earlier on Tuesday, increasing the chance it may miss its official growth target for the first time in 15 years this year.

The Finance Ministry said government spending in September climbed 9.1 percent from a year earlier, accelerating from a 6.2 percent annual gain seen in August.

In the 10.4 trillion yuan ($1.7 trillion) that was spent by governments between January and September, education was the biggest expense. It accounted for about 15 percent of total spending and was up 11.1 percent in the first nine months compared with the year-ago period.

Money spent on public homes grew 22.2 percent over the same period, among the fastest areas of expenditure.

On the other side of the ledger, fiscal revenues in September rose 6.3 percent from a year ago, up marginally from 6.1 percent in August but still down from July's 6.9 percent increase.

Increasing public spending to stoke the economy is a cornerstone in China's economic policies in recent years.

The central government in May ordered regional governments to allocate all of their 2014 budgets by the end of June to support China's economy, or risk having the money called back.

Beijing rolled out 4 trillion yuan ($654 billion) in spending in 2008/09 to bolster the economy from the effects of the global financial crisis.

Although the tidal wave of expenditure quickly lifted China out of its brief downturn in 2009, it also left the country with a pile of public debt that remains a problem even today.

That has led experts, including the World Bank and International Monetary Fund, to urge China to refrain from loosening fiscal and monetary policies to bolster economic growth.