China's central govt fiscal revenue growth slows

BEIJING -- China's central government saw its fiscal revenue growth slow down in 2012 and may struggle to meet this year's target, according to a government report released on Thursday.

Last year, the central government had a fiscal revenue of 5.62 trillion yuan ($910 billion), a year-on-year increase of 9.4 percent, according to a State Council report on the central government's final accounts for 2012.

In 2011, central fiscal revenue increased by 20.8 percent from the previous year.

The slowdown was caused by low growth and the reduction of tax revenue that went to the central treasury, according to a report submitted to the bi-monthly session of the Standing Committee of the National People's Congress (NPC), China's top legislature.

For instance, revenue from value-added tax in the domestic market only met 97.2 percent of the budgeted target because industrial performance was poor.

This year, the central government may be under great pressure to achieve the full-year target of 7-percent growth, Finance Minister Lou Jiwei said when elaborating on the report.

In the first four months of the year, central fiscal revenue dropped by 0.8 percent from the same period last year, largely due to a slowdown in economic growth and structural tax reductions, according to the report.

In the next few months, industrial output growth may continue to slow down and enterprises may report less profits, which will set back fiscal revenue growth, Lou said.

A pilot program to replace the business tax with a value-added tax (VAT) in some service sectors will be expanded to the whole country in August, which will likely reduce central government revenue, he added.

Since the beginning of last year, China has adopted a raft of tax-cutting measures to help alleviate burdens for businesses and individuals and serve the country's economic restructuring.