Austerity measures will help plug revenue and expenditure gaps

The central and provincial governments recently released their revenue and expenditure data, showing a relatively rapid growth in fiscal revenue, effectively guaranteeing spending in key areas.

The double-digit revenue growth, however, does not mean government revenues and expenditure are no longer "tightly balanced". Instead, the government should continue to pay more attention to resolving revenue and expenditure gaps.

Statistics show that the central government's general public budget revenue grew by 24.2 percent year-on-year in the first five months of this year, and the growth rates of some provinces were also impressive, with Shandong seeing an increase of 19.2 percent, Hunan 25.5 percent, and Jilin 28.5 percent.

The rapid growth in corporate income tax, domestic consumption tax and import tax reflect the steady improvement in the country's business efficiency, strong rebound in its household consumption and steady growth of foreign trade.

However, this year's high year-on-year growth is because of a low base in 2020 owing to the novel coronavirus outbreak. For a more objective view, one must compare the figures with the growth figures for the same period in 2019. For example, fiscal revenue in the first five months of this year grew by 7.3 percent compared with the same period in 2019. As the base of the same period gradually increased in the second half of last year, this year's revenue growth is expected to see a first-high-then-low trend.

Because of an increase in fiscal deficit and reduced sources of revenue, the increase in financial resources available this year is relatively low. There is higher requirement of funds for rural revitalization, the development of education, science and technology, and emergency and disaster relief. Because of such spending inflexibility, there exists a serious gap between government revenue and expenditure.

To plug the gap the government should adhere to austerity, reduce non-urgent and non-rigid expenditures, and strictly control spending on public affairs and meetings, business travel, and training. It also needs to increase sources of revenue and strengthen the coordination of financial resources. At the national level, the strengthened and standardized management of the paid use of State resources and assets nationwide has driven the growth of non-tax revenues, and there is still potential to be tapped through the mobilization of resource assets to increase disposable financial resources.

It is also necessary to optimize the expenditure structure, improve the mechanism of fund allocation and use, and improve the efficiency of funds use.