Revenue from
China’s government is on a rise from 315 RMB billion in1991 to 5000 RMB
billion in 2007 reflecting a 16.3 times growth during this period. Comparing
between years 2006 and 2007, China’s revenue is at a remarkable growth rate
of 32.4%- the steepest increase for this period. Most of the revenue is
derived from taxes through consumption, corporate income, personal income
and imports. The increase in revenue is a healthy sign as the amount of
revenue is needed to finance the large amount of expenditure so as to
prevent a deficit from occurring.
Below is the chart of China government revenue and growth rate from year 1991 - 2008:
Chinese government expenditure and trends
Similar to the rising revenue, China’s expenditure has soared from 340
RMB billion to 5000 RMB billion in 2007- 14.7 times increase. This leap
is not surprising as China’s accelerated growth is largely attributed to the
vast amount of expenditures spent on upgrading in various aspects of the
country such as education, medical and health, and building of
infrastructures.
Below is the chart of China government expenditure and trends from year 1991 - 2008:
Chinese government revenue VS expenditure
Combining in the above two graphs, the below trend is obtained. It can be
observed that from the period of 1991 to 2006, there has been continuous
budget deficit. Only in 2007, there has been a surplus of 154 RMB billion.
However, this seems to be just a temporary situation as China has numerous
major development plans for the country in the upcoming years. These plans
require extensive amount of revenue which might pose difficulties in the
next few years because of the economic slowdown. This has resulted in the
decline of corporate profits and tax cuts to enhance growth amid the
worldwide financial crisis. Thus, a deficit would be expected for the next
period.
Below is the chart of
China government revenue VS its expenditure and trends from year 1991 - 2008:
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