(Yicai) May 24 -- Local Chinese administrations recorded a sudden decline in fiscal income last month amid shrinking taxes and demand for land by property developers, which made them look for new ways to use their resources more efficiently and rely more on transfers from the central government.

General public budget income dropped by 2.5 percent from a year earlier, according to the latest official data from 13 administrations. From January to April, such fiscal income totaled CNY4.57 trillion (USD630.8 billion), up 0.1 percent from a year ago. Nine out of 13 posted growth.

Slowing growth was partly explained by cuts in taxes and fees. China introduced four new tax cuts in mid-2023 while in 2022, it started allowing small and medium-sized manufacturers to defer some tax payments, resulting in a higher base last year.

If removing these factors, growth was promising. For example, Zhejiang province, known for tech companies such as Alibaba Group Holding, increased its fiscal income by 6.7 percent based on such adjusted metrics instead of 0.5 percent.

Other factors that limited boosts in fiscal revenue were softening economic growth, operational difficulties of some companies, and the contraction of the producer price index.

Regions are working out other ways to improve their balance sheets. They are leasing and selling state-owned assets and collecting fees from the use of public utilities. Some provinces that boosted their non-tax incomes by double digits were Jiangsu, Zhejiang, and Sichuan provinces.

Besides tax collection, land resources make up a large part of regions' financial strength. Funds income, a major contributor to fiscal revenue, slumped by 9.3 percent to CNY1.22 trillion in the four months as transfers of land use rights to build properties decreased amid developers' financial issues.

To balance out falling fiscal incomes, local administrations tend to reduce their expenses. Public spending tallied CNY7.82 trillion in the four months, up 2.6 percent. Meanwhile, expenses of the funds budget, which include infrastructure projects, plunged by more than 21 percent to CNY2.18 trillion, according to data from the finance ministry.

The central government is deepening its support to regions this year. It issued CNY8.68 trillion of transfer payments to local governments as of April 10 with an expected total of CNY10.2 trillion (USD1.4 trillion) for the full year. Moreover, it will issue CNY1 trillion worth of ultra-long special sovereign bonds this year, half of which should reach local governments.

Editors: Liao Shumin, Emmi Laine