(Yicai Global) March 22 -- China's fiscal results for the first two months of the year far exceeded market expectations with general public finance revenue reaching USD580.2 billion (CNY3.66 trillion), up 15.8 percent on the year and representing the biggest jump since 2012.

Tax revenues, a direct indicator of economic growth, soared 18.4 percent annually, China's finance ministry said in a statement, driven by accelerated industrial production, growth in the services market and improvements in corporate earnings and consumer spending.

During the two months, nationwide industrial added-value grew by 7.2 percent annually, 0.9 percentage point faster than that of the same period last year. The services industry developed steadily, and consumer activity has increased. The growth in total consumer goods retail sales nudged up by 0.2 percentage point compared with the same period of last year. As a result, value-added tax revenues, the biggest source of tax income in the country, scaled up by 22.3 percent to CNY1.3 trillion.

The period also saw a 29.5 percent increase in consumption tax revenues. Other taxes that grew by more than 20 percent included VAT and consumption taxes for imported goods, vehicle purchase tax (for which relevant incentives have recently expired), among others.

Corporate income tax, the second largest source of national tax revenue, rose by 14.8 percent on the year to CNY746.8 billion during the last two months, driven by consistent increases in corporate profits.

Land and real estate-related taxes posted impressive gains. Deed and property taxes, for example, were up 28.4 percent and 17.5 percent, respectively. On the flip side, despite the strong growth in tax income, non-tax government revenues continued on the downtrend falling by 3.5 percent, which is largely attributable to the carry-over effect following heavy cuts in administrative fees last year.

Apart from general public finance revenues, income from government funds – another significant revenue earner – also registered significant growth.

During the period, national revenues from government funds went up by 33.3 percent to CNY967.1 billion, of which CNY849.9 billion was generated from land leases by local governments, marking an annual increase of 38.9 percent.

China will continue to implement a proactive fiscal policy, and fiscal expenditure growth will remain at a relatively high level. National public finance expenditure rose by 16.7 percent year-on-year to CNY2.91 in January and February.

Government spending on education, social security and medical and health care totaled CNY1.2 trillion. There has been a spike in spending on infrastructure construction. Government expenditure on the transportation sector swelled by 55.7 percent, and spending on agriculture, forestry and water conservancy and on urban and rural community development grew by 35.9 percent and 23.7 percent, respectively. Government spending on all the three items outstripped the average growth of general public finance expenditure.

Significant fluctuations in general public finance expenditure in the two months are due to seasonal factors such as the Spring Festival holiday, which has been the case for many years, the ministry noted. It will conduct follow-up analyses on fiscal revenues and spending later in the year.