London Daily

Focus on the big picture.
Monday, Oct 20, 2025

China’s budget deficit hits record $1.1 trillion on COVID-Zero policy slump

China’s budget deficit hits record $1.1 trillion on COVID-Zero policy slump

China’s broad budget deficit hit a record so far this year, showing how damaging the now abandoned COVID Zero policy and the ongoing housing slump have been to the economy and to the government’s finances.

The augmented fiscal deficit was 7.75 trillion yuan ($1.1 trillion) in January to November, according to Bloomberg calculations based on data from the Ministry of Finance. That was more than double the same period last year and larger than in 2020, when the economy was battered by the initial COVID outbreak and growth was the slowest in decades.

The worsening deficit underscores just how bad the economy was at the end of November, shortly before the government in Beijing effectively scrapped its strict policy of trying to contain COVID infections.

The lockdowns, testing and quarantine rules that were key to the COVID Zero policy put a strain on consumer and business spending, pushing the economy close to contraction in the second quarter. A surge in infections this quarter has already caused a drop in retail sales in October and November.

The COVID policy was also increasingly expensive to maintain. Local governments had to bear huge costs to test and quarantine residents, while their income from land sales and taxes plummeted amid a slump in the housing market.

With COVID infections now sweeping across the country, local governments are unlikely to see an immediate improvement in tax revenue and finances. Healthcare spending is likely to jump as more people fall sick, even if spending on testing and quarantines fall. There’s also little immediate prospect for an improvement in the property market, which will likely keep land sales revenue subdued.

Consumers in some cities are avoiding crowded places, and labor shortages and factory disruptions are expected to increase in coming months as infections spread. Car sales, a rare bright spot for consumption this year, declined for the first time in six months in November, while the fall in home purchases deepened even though local authorities further eased curbs on buying.


Spending Up, Revenue Down


Total income from the general public and government fund budgets was 18.6 trillion yuan in the first 11 months of this year. That was down 3 percent from a year earlier, a slowdown from the 4.5 percent drop in the first 10 months. It would have risen 6.1 percent had it not been for tax rebates the government mostly handed out earlier in the year, according to the finance ministry.

Governments across the country made 715 billion yuan from selling land in November, compared with the 552 billion yuan earned in the previous month but down about 13 percent from a year earlier. Land sales revenue has slumped by double digits almost every month this year, and may “remain subdued in coming months” given developers’ still-tight funding conditions and the ongoing COVID ‘exit wave’, economists from Goldman Sachs Group Inc. wrote in a report after the data was released.

Revenue from deed taxes slid 23.8 percent in the first 11 months of the year from the same period in 2021.

Total government spending in the first 11 months was 22.7 trillion yuan, which was up 6.2 percent from a year earlier and compares with a 6.4 percent rise in the January-October period. Expenditure under the government fund budget rose 5.5 percent, decelerating from a 9.8 percent increase in the first 10 months.

Total fiscal spending is expected to total 26.3 trillion yuan this year, Finance Minister Liu Kun wrote in an article published by the official publication Study Times Monday. That compares with expenditure of 24.6 trillion yuan in 2021.

Newsletter

Related Articles

0:00
0:00
Close
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
Windows’ Own ‘Siri’ Has Arrived: You Can Now Talk to Your Computer
Thailand and Singapore Investigate Cambodian-Based Prince Group as U.S. and U.K. Sanctions Unfold
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Chinese Tech Giants Halt Stablecoin Launches After Beijing’s Regulatory Intervention
Manhattan Jury Holds BNP Paribas Liable for Enabling Sudanese Government Abuses
Trump Orders Immediate Release of Former Congressman George Santos After Commuting Prison Sentence
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
Bessent Accuses China of Dragging Down Global Economy Amid New Trade Curbs
U.S. Revokes Visas of Foreign Nationals Who ‘Celebrated’ Charlie Kirk’s Assassination
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
DJI Loses Appeal to Remove Pentagon’s ‘Chinese Military Company’ Label
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Australian Prime Minister’s Private Number Exposed Through AI Contact Scraper
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
×