Covid Zero, Property Slump Drive China Into Record Deficit (1)

China’s budget deficit jumped to a record $1.3 trillion last year, showing the strain put on local government finances by the spending needed to implement and offset the ultimately futile Covid Zero policy.

The overall deficit of 8.96 trillion yuan puts local governments in an increasingly poor fiscal position and could make the central government reluctant to support the economy with fiscal spending after last year’s slump in growth. The deficit was larger than the previous record of 8.72 trillion yuan in 2020, when the economy was battered by the initial Covid outbreak, and was 51% higher than in ...