China's fiscal revenue falls 14pc to 4.6tn yuan
China's fiscal revenue in the first quarter dropped 14.3 percent year-on-year to 4.6 trillion yuan (HK$5.04 trillion) due to the impact of Covid-19 and the country's massive tax and fee cuts.
The net profit of state-owned enterprises dwindled 58.8 percent in the first three months from a year earlier, official data showed.
As expected, China cut its benchmark lending rate yesterday to reduce borrowing costs for companies and prop up the coronavirus-hit economy, after it contracted for the first time in decades.
From January to March, the fiscal spending totaled 5.53 trillion yuan, down 5.7 percent year-on-year, the Ministry of Finance said.
Looking ahead to the second quarter, fiscal revenue is expected to decline, but with the accelerated restoration of production and living order, the decline in fiscal revenue will gradually narrow, said Liu Jinyun, an official with the MOF.
Meanwhile, total net profits earned by enterprises owned by China's central government during the first three months of 2020 plunged 58.8 percent from a year earlier, the state assets regulator said on Monday.
The People's Bank of China also stepped up policy easing yesterday.
The one-year loan prime rate was lowered by 20 basis points to 3.85 percent from 4.05 percent previously, while the five-year LPR was cut by 10 bps to 4.65 percent from 4.75 percent.
The move was the second cut to the lending benchmark rate this year, and the latest reduction in one of China's key lending rates. Most new and outstanding loans are based on the LPR, while the five-year rate influences the pricing of mortgages.
Analysts believe more aggressive stimulus is unlikely at this point, however, given policymakers' concerns about a rapid rise in debt and risks to the financial system.
"After that, the PBOC may use RRR cuts more than rate cuts before September to delay its policy rates touching ultra-low levels," said Iris Pang, Greater China economist at ING.
Source: AP
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