Economic Observer Online
By Xi Si (西斯)
Mar 7, 2012
Translated by Ma Zheng
Original Articles: [Chinese1, Chinese 2, Chinese 3]

  Source: Ministry of Finance Budget Report, National Bureau of Statistics

The government’s total revenue may approach 15 trillion yuan in 2012 according to the budget report submitted Monday by the Ministry of Finance to the National People’s Congress, China’s top legislative body.

However, if you take into account the 800 billion yuan that will be raised to cover the budgeted deficit, the 270 billion that is being carried over from last year’s budget, total government spending is likely to come to 16 trillion yuan in 2012.

Last year, more than 90 percent of the country’s more than 10 trillion yuan in “public fiscal income” came from taxes and it was mainly spent on issues that “directly affect people’s lives,” including education, medical and health care, social security, infrastructure and defense.

The target for fiscal revenue growth in 2012 is 9.5 percent, higher than the projected 7.5 percent growth in gross domestic product. From 2009 to 2011, the target growth rate of fiscal revenue was set to an average of 8 percent, the same as the target for GDP growth. But the actual growth rates turned out to be 11.7, 21.3 and 24.8 percent respectively. “The huge differences reflect the fact that the budget drafting is not scientific,” a scholar from Nankai University said.

The GDP growth target has been reduced by 0.5 percentage points, while the fiscal growth rate target has been raised by 1.5 points. The government wants to improve the accuracy of the budget by setting the fiscal budget growth rate higher.

Last year, the government received 3.3 trillion yuan from land transfer fees – the sale of long-term leases on state-owned land - an increase of 22 percent compared with the previous year. This year, the government it is expecting that revenue from land transfer fees will be less than 3 trillion yuan, a decline of 18.6 percent compared with last year.

Revenue from government-managed funds in 2012 will reach 3.48 trillion yuan, down by 15.9 percent. Over 75 percent of that total will come from land transfer fees.

Links and Sources
The Wall Street Journal: Ministry of Finance Budget Report (via WSJ)