Due to the tight budget, the Chinese government seeks to revitalize more than 40 trillion yuan ($5.5 trillion) in state-owned assets.
According to a report from CBN, China’s Ministry of Finance on November 1 released “Guiding opinions on revitalizing the state-owned assets of administrative agencies.”
The ministry requires all administrative agencies to revitalize and utilize various types of state-owned assets such as houses, land, and vehicles to raise their own money to fund their revenue and spending.
The total assets involved are as high as 40 trillion yuan ($5.5 trillion).
According to official data, in 2020, China’s total state-owned assets of administrative agencies were 43.5 trillion yuan (nearly $6 trillion), total liabilities were 11.2 trillion yuan ($1.5 trillion), and net assets were 32.3 trillion yuan ($4.4 trillion).
Their assets include state-owned assets owned and used by all types of administrative units at all levels, public infrastructure, affordable housing, and other administrative state-owned assets.
China’s fiscal revenue has declined this year due to the impact of the Covid-19 pandemic, tax cuts and rebates, and the downturn in the property market.
Meanwhile, China still has to maintain the rapid growth of fiscal expenditure to stabilize the economy. As a result, the country has suffered a record-high of fiscal deficit.
Revitalizing and utilizing the vast amount of state-owned assets of administrative agencies will help alleviate the budget gaps.
The Ministry of Finance said that the means of revitalization include self-use, sharing, transfer, leasing, disposal, and other ways. In addition, it hopes to improve the use of existing assets.
According to the ministry, China’s non-tax revenue in the first nine months of this year was 2.88 trillion yuan ($393 billion), an increase of 23.5% from the same period last year.
However, due to a cold property market, China needs more time to speed up the revitalization and utilization of state-owned assets.
Luo Zhiheng, the chief economist of Guangdong Kai Securities, said that the government wants to use the income from the paid use of state-owned assets, including the disposal of idle properties, to compensate for the fiscal deficit.
But there is a risk that this revenue is unsustainable.