According to a report from the Wall Street Journal "China's fiscal deficit for 2013 came in below the government's budget projections, reflecting less aggressive spending on some social programs and better-than-expected revenue despite slower economic growth.
The figures suggest China has plenty of firepower to ratchet up spending if the economy slows considerably. Last year, economic growth came in at 7.7%, though the economy struggled somewhat in the first half of the year, hitting a low-point of 7.5% growth in the second quarter".
A brief ministimulus policy of spending on rail and subways as well as business tax breaks helped push growth higher in the second half.
The deficit came in at 1.06 trillion yuan ($174 billion), about 1.86% of gross domestic product last year, according to calculations by The Wall Street Journal based on government data. China had projected a fiscal deficit of 1.2 trillion yuan, or about 2% of gross domestic product, in its budget.
For 2013, fiscal revenue reached 12.91 trillion yuan, up 10.1% and outpacing budget projections of an 8% rise. Fiscal spending totaled 13.97 trillion yuan, up 10.9%, slightly topping the 10% rise included in the budget, according to the Ministry of Finance.
"I think that under the difficult circumstances, this was a fairly positive result," said Jia Kang, a senior researcher with the ministry.
Tax revenue grew 9.8% from a year earlier to 11.05 trillion yuan in 2013, slower than an increase of 12.1% in 2012, while nontax revenue, including fees collected by the government, climbed 12.1% to 1.86 trillion yuan, compared with growth of 17.5% in 2012.
Education was one area where the government chose to curb spending. Expenditures rose a modest 3%, far below the 28.3% increase in 2012. Spending on public housing was 1% lower than in 2012 despite numerous government statements on the importance of providing affordable homes for the less affluent. Spending on lower cost housing climbed 16.4% in 2012.
"Spending growth in some areas of social welfare has slipped notably," said Gong Min, an economics professor at Xiamen University. "Social welfare benefits are the first thing to be cut when economic growth starts to falter."
