(Bloomberg) — China’s central government accelerated spending at the start of the year, a sign it’s taking on more financing responsibility to support the economy and to avoid worsening local government debt risks.
Its general public expenditure jumped 14% from a year earlier to 482.8 billion yuan ($66.8 billion) in January and February combined, the fastest pace for the period in five years, according to data provided by the Ministry of Finance.
Beijing is gradually shifting the responsibility for supporting economic growth to central government from local officials — a way to maintain the level of investment while defusing local debt risks. Local governments have been struggling after a property crisis reduced a critical source of income from land sales, and a slowing economy weighed on tax revenues.
Beijing is also trying to contain credit risks at local government financing vehicles, or LGFVs. It’s been pushing them to sell assets and allowing some of their liabilities — known as hidden debt as they don’t appear on government balance sheet — to be swapped into government bonds.
The latest data shows Beijing intends to “underpin growth while preventing risks,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. “Its overall strategy would be to replace higher leveraging by local governments while still trying to maintain cashflow for LGFVs.”
Central and local authorities spent almost 700 billion yuan in the first two months on agriculture, forest and irrigation-related issues, as well as urban and rural community development. This is up 22% from a year earlier.
The two sectors are among those identified to be eligible for funding from last year’s 1 trillion yuan of additional sovereign bond issuance, which Beijing has handed out to local governments to invest in 15,000 projects.
Read more: China Signals No Tolerance for Sharp Slowdown With Rare Aid
Local governments’ general public expenditure rose 5.8% on-year in the first two months, down from 6.8% a year earlier, the data shows. Their spending under the government-managed fund budget fell 11.1%, similar to the drop a year before, due to restrictions linked to sluggish land sales.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
