(May 20): China scaled back government spending at its fastest pace in six months in April, a move that contributed to an unexpected slowdown in the economy across the board.
A broad measure of public expenditure fell 7.3% from a year ago, accelerating from the 2.5% decrease in March to mark its sharpest decline since October, according to Bloomberg calculations based on Ministry of Finance data released Wednesday. By contrast, broad fiscal revenue rose 2%.
The data helps explain a surprising contraction in fixed-asset investment that China recorded in April, which followed a rebound earlier this year. Combined with sluggish consumer spending, the investment downturn outweighed booming exports, dragging down overall economic activity.
Economists have pointed to several reasons for the fiscal pullback. Solid economic growth in the first quarter may have reduced the impetus for authorities to step up spending. Others noted a potential funding gap in April, as some construction projects were moved from late 2025 to early 2026 while new projects had yet to receive approval. Officials may also have faced pressure to repay arrears to companies.
Infrastructure-related expenditure under China’s main budget plunged 17.7% in April from a year earlier, worsening from the 8.5% drop in March, according to Bloomberg calculations.
China will likely increase infrastructure spending to shore up growth. Some economists estimate that China’s economic expansion slowed to roughly 4% in April, tracking below the government’s official full-year target of 4.5% to 5%.
See also: China’s economy succumbs to slowdown and reignites stimulus talk
In April, the Communist Party’s decision-making Politburo pledged to accelerate the construction of infrastructure networks spanning water, electricity, computing power, telecommunications, urban underground pipes and logistics. Investment in those projects could exceed seven trillion yuan (US$1 trillion or $1.3 trillion) this year, according to Sinolink Securities’ estimate.
Uploaded by Magessan Varatharaja
