Opinion: China’s Budget-Strained Local Governments Need to Be Cut Some Slack

Since the beginning of the year, China’s fiscal conditions, especially the fiscal stress on local governments, have drawn wide attention. Now in the middle of the year, we need to take stock of the country’s fiscal outlook and objectively assess the challenges.

In the first five months of 2023, general public budget revenue and tax revenue grew 14.9% and 17% year-on-year, respectively, which paints a seemly rosy picture. But the increase mainly stemmed from an exceptionally low base in the same period in 2022 when a new value-added tax refund policy was implemented.