China budget deficit hits record high amid tax rebates, Covid pain

The drop in revenue just as more spending is needed will force local authorities to either boost their already heavy debt burden or accept weaker economic growth

China’s broad budget deficit in the first five months of the year ballooned by almost a trillion yuan to the worst on record as spending soared due to Covid outbreaks and tax breaks to stimulate the economy caused income to drop. 

The government took in a combined 10.9 trillion yuan ($1.6 trillion) in general and government fund revenues in January to May, but that was far exceeded by the 13.8 trillion yuan it spent in the period. The 2.9 trillion yuan deficit, which covers the budgets for all levels of government, compares to a small surplus at the