Fiscal cushion to sustain Q2 economic momentum

Steady increase in revenue to provide leeway against external headwinds

Substantial growth in China's fiscal revenue during the first four months of this year and the rapidly improving financial climate are expected to give policymakers more leeway to issue policies that can sustain growth momentum in the second quarter, experts said on Tuesday.

The robust growth in fiscal revenues will allow policymakers to fine-tune policies in order to ensure stable growth and withstand unexpected headwinds and risks in the short-term, such as trade frictions and the financial deleveraging campaign, said Wendy Chen, a senior economist with Nomura Securities.

Chen expects the government to speed up fiscal spending in the coming months to maintain the growth momentum.

From January to April, the country's gross fiscal revenue maintained a double-digit growth rate of 12.9 percent year-on-year to reach 6.9 trillion yuan ($1.08 trillion), with tax income accounting for 6.09 trillion yuan of the total, according to data from the Ministry of Finance.

Fiscal revenue stood at 1.85 trillion yuan in April, up 11 percent from a year earlier, while tax revenue rose 14.6 percent to 1.66 trillion yuan, according to the ministry.

Bai Jingming, vice-president of the Chinese Academy of Fiscal Sciences, said the higher tax income was largely due to the steady economic growth momentum.

China's industrial output expanded to 7 percent in April, increasing from the 6-percent rise in the previous month and beating market expectations of around 6.4 percent, official data showed.

During the first four months, industrial output rose 6.9 percent, compared with the 6.8-percent gain in the first quarter, the National Bureau of Statistics (NBS) said in a statement.

"Economic restructuring is gathering pace with the upgrade of traditional industries and the fast expansion of emerging industries. The overall improvements in corporate profits has also contributed to the tax increase," said Bai.