Experts: More active fiscal policy on agenda

China's fiscal policies will work more actively to boost both investment and consumption to secure a greater overall economic recovery in the second half, experts said.

Their comments came after the Ministry of Finance said on Wednesday that the country's first-half fiscal revenue grew 13.3 percent year-on-year, totaling 11.92 trillion yuan ($1.65 trillion). Fiscal spending over the same period totaled 13.4 trillion yuan, up 3.9 percent.

In the first six months, tax revenue increased 16.5 percent year-on-year, with domestic value-added tax (VAT) growing 96 percent.

Specifically, domestic consumption tax over this period came in at 827.2 billion yuan, contracting by 13.4 percent year-on-year. Corporate income tax came in at 2.686 trillion yuan, down 5.4 percent.

At a media briefing on Wednesday, Xue Xiaoqian, a ministry official, noted that fiscal revenue growth in the first six months has been comparatively high. Such a notable growth benefited from the country's economic recovery, but was also influenced by the base effect of the large-scale VAT deferrals and refunds since last April. Such an influence has resulted in a prominent jump in VAT revenue this year between January and June, pushing up overall fiscal income accordingly.

Li Dawei, deputy director of the ministry's budget department, said at the briefing that some 2.17 trillion yuan of special local government bonds have been issued in the January-June period, and this has supported a large number of projects that benefit people's livelihoods and shore up weak links.

Li said that China will guide local governments to speed up the issuance of such bonds in the second half.

A quicker and stronger recovery in the services sector, particularly in catering and tourism, has contributed to the significant increase in fiscal revenue in the first half, said Wen Laicheng, a professor at the Central University of Finance and Economics and an expert on fiscal policy studies.

"Going forward, fiscal revenue growth is likely to face some pressure, as the current economic recovery still faces challenges," he said. "For example, effective demand remains insufficient from both investment and consumption. Recovery of the private sector is not satisfactory. Plus, residents' willingness to spend is weak, which is leading to an increase in bank deposits."

He urged accelerated implementation of proactive fiscal policy measures to facilitate economic recovery this year.

"Efforts are needed to accelerate the issuance of local government special bonds to generate more real economy activity. In the meantime, fiscal policies that help promote investment and consumption should be quickly introduced," he said.