Govt steps on fiscal pump

However, he said, it's been shown that fiscal policy can only provide limited support for economic growth, because fiscal expenditure accounts for less than 10 percent of fixed-asset investment.

"It is more of a signal. There hasn't been a fundamental change in the policy stance," Xu said.

Fiscal expenditure in May was shown as a separate figure on the ministry's website, unlike the first four months where there was only cumulative data.

"Everyone's been anxious for support measures to restore growth. No wonder that the May data was emphasized," said Lu Zhengwei, chief economist with Industrial Bank Co Ltd.

Chinese leaders have ruled out any large-scale stimulus, given that the country is still nursing a debt hangover from the 4 trillion yuan stimulus implemented during the global crisis in 2008-09, which led to a massive buildup in local government borrowing.

The government has acted since April to steady growth through focused measures. The latest move was the decision by the People's Bank of China to cut the required reserve ratio for banks that have lent heavily to the farming sector and small companies.

The key issue for the economy remains tight liquidity, the result of stringent monetary policy, Xu said.

Along with more spending has come less revenue for governments at various levels. Fiscal revenues only rose 7.2 percent year-on-year in May, decelerating from 9.2 percent in April. The ministry said that slowdown reflected a weaker economy and falling property transactions.

Moody's Investors Service Inc said that China's current housing slowdown will likely last longer than the previous two down cycles as the nation rebalances its economy and developers work through high inventory levels.

Although more recent statistics have suggested the nation's economy may be stabilizing, the loss of momentum has rattled global markets.

In its latest World Economic Forecast, the World Bank lowered its estimate for global economic growth this year, citing disappointing economic performances in emerging economies.

The bank cut its estimate of global GDP growth to 2.8 percent this year, down 0.4 percentage point from its January forecast.

It also slightly adjusted China's growth outlook from 7.7 percent to 7.6 percent, and it said that achieving the target will depend on a successful economic restructuring.

China's May fiscal revenue rises 7.2%	Fiscal reforms to ease local govt debt pressure