China’s economic slump should call for the government to make up for lagging demand with an expansionary fiscal policy. But the latest data out of China indicates that the Chinese government’s fiscal spending as a share of GDP appears to have dropped again in 2023, continuing a decline that started in 2021. Behind that drop was China’s property sector turmoil, which sharply curtailed a key source of revenue that local governments depend on for their spending.
Fiscal spending in China is urgently needed because the Chinese economy is facing increasing deflationary pressure and weak private…
