(Yicai) March 28 -- China’s finance ministry expects the central government’s fiscal income to fall this year, while expenditure continues to increase amid a “more proactive” fiscal policy aimed at stimulating economic growth.

General public budget revenue, the sum total of tax and non-tax revenues, will likely drop 3.5 percent to CNY9.7 trillion (USD1.34 trillion) in 2025, compared with growth of 1.3 percent last year, according to ministry figures on March 26.

Tax revenue is expected to rise 3.6 percent to CNY9.47 trillion, while non-tax revenue is forecast to plunge 75 percent to CNY227 billion (USD31.2 billion), mainly because reduced income from state-owned capital operations and fees for the use of state-owned assets.

General public budget expenditure will likely jump 4.5 percent to CNY14.75 trillion (USD2.03 trillion), versus 3.5 percent growth in 2024, the figures also showed. This reflects a stronger and more sustained fiscal policy this year.

Earlier this month, the government raised the annual fiscal deficit ceiling to around 4 percent of gross domestic product, or CNY5.7 trillion (USD785 billion), the highest ratio on record, as part of its “more proactive” fiscal policy.

It had kept the target below 3 percent of GDP for a long time, but has exceeded that since the Covid-19 pandemic, setting it at 3 percent last year. The previous record was 2020’s 3.6 percent at the onset of the pandemic.

Defense spending is expected to increase 7.2 percent to CNY1.78 trillion, accounting for over 12 percent of total expenditure. Debt interest and science and technology outlays will probably both jump 10 percent to CNY834.6 billion and CNY398.1 billion, respectively.

Spending on education will likely climb 5 percent to CNY174.4 billion because of a stronger focus on basic research, applied basic research, and national strategic technological work.

The central government sees transfer payments to local governments reaching CNY10.34 trillion, with the funds mainly used to plug local revenue and expenditure gaps, supporting efforts to ensure livelihoods, wages, and employment, and promoting coordinated regional development.

The provinces of Hebei, Henan, Hubei, Hunan, and Sichuan will be among the local governments to receive the largest share of transfer payments.

Editor: Futura Costaglione