China's budget deficit hits record high due to tariffs

China's fiscal deficit surged over the past four months to an unprecedented level, due to financial stimulus. The government intensified efforts to support the economy amid escalating trade tensions with the US.

The total deficit reached 2.65 trillion yuan ($ 367 billion) from January to April, marking the highest level ever recorded for this period, according to Bloomberg calculations based on data released by the Ministry of Finance on May 20.

The data showed that total government spending rose 7.2%, amounting to 11.97 trillion yuan from January to April. Notably, interest payments on debt emerged as the fastest-growing category in the general budget, increasing by 11% year-on-year (YoY).

Conversely, total government revenue during this period stood at 9.32 trillion yuan, reflecting a 1.3% YoY decline.

Looking ahead, the government is expected to postpone introducing new support measures as the need for additional stimulus continues to diminish. This follows a temporary agreement between China and the US to reduce tariffs imposed on each other's goods.