Experts: Govt should increase fiscal spending, emphasize investment, consumption

China should scale up its fiscal spending and shift its focus from investment-driven model to a more balanced approach that emphasizes both investment and consumption, experts said.

They made the comments after the Ministry of Finance said on Friday that China's general public budget expenditure totaled 7281.5 billion yuan in the first quarter, representing a 4.2 percent year-on-year increase.

Li Xuhong, deputy dean of the Beijing National Accounting Institute, said that this expansion in fiscal spending, with a particular emphasis on bolstering public welfare and advancing key national initiatives, shows the country's proactive approach to using fiscal policy as a lever to drive high-quality growth.

Luo Zhiheng, chief economist at Yuekai Securities, noted that the Government Work Report this year highlighted expanding fiscal spending instead of placing greater emphasis on tax cuts and fee reductions.

"This strategic shift is crucial, as tax breaks and fee cuts may lead to the accumulation of funds in the hands of enterprises or households, whereas increased spending, whether on infrastructure projects or government procurement, can directly translate into revenue for businesses," Luo said.

Meanwhile, by enhancing public welfare and addressing the pressing issues faced by the people, such as access to healthcare and affordable housing, the government can stimulate the latent consumption power of households, Luo added.

The country's general public budget revenue, sum-up of the country's tax and nontax revenue, reached 6018.9 billion yuan in the first quarter, down 1.1 percent year-on-year, according to the ministry.

The decline in the first quarter narrowed by 0.5 percentage points compared to the January-February period, and March recorded a 0.2 percent growth, marking a shift from negative to positive monthly growth, Li added.