China land sales income hits decade low, widening budget deficit
[BEIJING] China's revenue from selling land plunged to the lowest in a decade, contributing to the widening of the budget deficit as the government ramped up spending in support of the economy.
Land sales revenue slumped 14.6 per cent on year to 194.1 billion yuan (S$35 billion) last month, the lowest since May 2015. The figure, based on Bloomberg calculations from the Ministry of Finance (MOF) data released on Friday (Jun 20), reversed a 4.3 per cent growth in April, which had been the first increase in three months.
The contraction contributed to a decline in overall government income, which reached 11.2 trillion yuan in the first five months of the year. The MOF only releases combined figures for January and February, which are averaged for comparing monthly land sales values.
Meanwhile, total expenditure jumped to 14.5 trillion yuan as authorities increased spending at the fastest pace in three years to bolster economic growth, pushing the budget deficit to 3.3 trillion yuan.
The slump in land sales underscores the persisting weakness in the property market, a major domestic drag on the Chinese economy, which is also contending with higher US tariffs on exports. This has also strained local government finances, limiting their ability to expand investment to aid growth.
'We maintain our forecast that government land sales revenue may decline further this year by 5 to 10 per cent, and continue to believe property construction and investment have not yet hit the bottom,' Lisheng Wang, an economist with Goldman Sachs, wrote in a note after the data release.
A NEWSLETTER FOR YOU
Tuesday, 12 pm Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Sign Up
Sign Up
Revenue from real estate-related levies, including deed tax paid on property purchases, fell 8.6 per cent on the year in May, deepening from a 0.9 per cent drop the previous month.
Total tax income increased 0.6 per cent for the month, decelerating from a 1.9 per cent gain in April.
The government's spending push has been key in shoring up the domestic demand this year. Its consumer goods trade-in programme, for instance, boosted purchases of electronics and home appliances with subsidies funded by special sovereign bond issuance.
The programme was so popular that some provinces temporarily suspended subsidies after exhausting national government allocations, prompting Beijing to assure consumers that more funds would be provided in the third and fourth quarters.
Goldman's Wang expects further fiscal expansion in the second half to mitigate deflationary pressures in some sectors and bolster market confidence. A budget revision later this year remains possible, he said, though not urgent given that economic growth appears on track to exceed 5 per cent in the January to June period. BLOOMBERG
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
2 hours ago
- Business Times
Singapore, China must work together in regional and multilateral platforms: PM Wong
[BEIJING] In a more uncertain and turbulent world, Singapore and China must not only forge stronger bilateral ties, but also work together in regional and multilateral platforms, said Prime Minister Lawrence Wong on Monday (Jun 23), the first full day of his five-day official visit to China. In a meeting with Chinese Premier Li Qiang in Beijing, PM Wong said that the two countries' relationship has 'grown from strength to strength', particularly following the upgrade of ties to an 'All-Around High-Quality Future-Oriented Partnership' in 2023. This partnership has provided a 'clear strategic direction' for cooperation, and provides a basis for Singapore and China to come up with fresh ideas and continue to find new ways to strengthen cooperation, such as in the digital and green spaces, he said. 'This deep level of trust and understanding cannot be taken for granted,' said PM Wong. 'It has to be cultivated year after year, generation after generation.' In his remarks, he noted that his introductory visit to China comes shortly after Singapore's last general election on May 3. He said that some in his delegation are new members of his team. He added: 'I'm encouraging everyone in my Cabinet to continue visiting China regularly, so that we can continue to build and strengthen the close ties between our two countries.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up This meeting at the Great Hall of the People took place shortly after a welcome ceremony for PM Wong. This was the first time they have met since the Asean Summit in Laos in October last year. PM Wong is in China until Thursday for what is his first official visit to the country since becoming prime minister in May last year. His trip also takes place as Singapore and China celebrate the 35th anniversary of diplomatic ties, he noted. For these reasons, the visit is 'extra meaningful', said the prime minister. PM Wong and Li will attend an agreement signing ceremony later on Monday, after which the Chinese leader will host PM Wong and his delegation to a dinner banquet. On Tuesday, PM Wong is expected to meet Chinese President Xi Jinping and China's third-in-command, National People's Congress chairman Zhao Leji.
Straits Times
2 hours ago
- Straits Times
DeepSeek aids China's military and evaded export controls, US official says
The US official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. PHOTO: REUTERS DeepSeek aids China's military and evaded export controls, US official says WASHINGTON/SAN FRANCISCO - AI firm DeepSeek is aiding China's military and intelligence operations, a senior US official told Reuters, adding that the Chinese tech startup sought to use South-east Asian shell companies to access high-end semiconductors that cannot be shipped to China under US rules. Hangzhou-based DeepSeek sent shockwaves through the technology world in January, claiming its artificial intelligence reasoning models were on par with or better than US industry-leading models at a fraction of the cost. 'We understand that DeepSeek has willingly provided and will likely continue to provide support to China's military and intelligence operations,' a senior State Department official told Reuters in an interview. 'This effort goes above and beyond open-source access to DeepSeek's AI models,' the official said, speaking on condition of anonymity in order to speak about US government information. The US government's assessment of DeepSeek's activities and links to the Chinese government have not been previously reported and come amid a wide-scale US-China trade war. Among the allegations, the official said DeepSeek is sharing user information and statistics with Beijing's surveillance apparatus. Chinese law requires companies operating in China to provide data to the government when requested. But the suggestion that DeepSeek is already doing so is likely to raise privacy and other concerns for the firm's tens of millions of daily global users. The US also maintains restrictions on companies it believes are linked to China's military-industrial complex. US lawmakers have previously said that DeepSeek, based on its privacy disclosure statements, transmits American users' data to China through 'backend infrastructure' connected to China Mobile, a Chinese state-owned telecommunications giant. DeepSeek did not respond to questions about its privacy practices. The company is also referenced more than 150 times in procurement records for China's People's Liberation Army and other entities affiliated with the Chinese defense industrial base, said the official, adding that DeepSeek had provided technology services to PLA research institutions. Reuters could not independently verify the procurement data. The official also said the company was employing workarounds to US export controls to gain access to advanced US-made chips. The US conclusions reflect a growing scepticism in Washington that the capabilities behind the rapid rise of one of China's flagship AI enterprises may have been exaggerated and relied heavily on US technology. DeepSeek has access to 'large volumes' of US firm Nvidia's high-end H100 chips, said the official. Since 2022 those chips have been under US export restrictions due to Washington's concerns that China could use them to advance its military capabilities or jump ahead in the AI race. 'DeepSeek sought to use shell companies in South-east Asia to evade export controls, and DeepSeek is seeking to access data centres in South-east Asia to remotely access US chips,' the official said. The official declined to say if DeepSeek had successfully evaded export controls or offer further details about the shell companies. DeepSeek also did not respond to questions about its acquisition of Nvidia chips or the alleged use of shell companies. When asked if the US would implement further export controls or sanctions against DeepSeek, the official said the department had 'nothing to announce at this time.' China's foreign ministry and commerce ministry did not respond to a Reuters request for comment. 'We do not support parties that have violated US export controls or are on the US entity lists,' an Nvidia spokesman said in a prepared statement, adding that 'with the current export controls, we are effectively out of the China data centre market, which is now served only by competitors such as Huawei.' Access to restricted chips DeepSeek has said two of its AI models that Silicon Valley executives and US tech company engineers have showered with praise – DeepSeek-V3 and DeepSeek-R1 – are on par with OpenAI and Meta's most advanced models. AI experts, however, have expressed scepticism, arguing the true costs of training the models were likely much higher than the US$5.58 million (S$7.22 million) the startup said was spent on computing power. Reuters has previously reported that US officials were investigating whether DeepSeek had access to restricted AI chips. DeepSeek has H100 chips that it procured after the US banned Nvidia from selling those chips to China, three sources familiar with the matter told Reuters, adding that the number was far smaller than the 50,000 H100s that the CEO of another AI startup had claimed DeepSeek possesses in a January interview with CNBC. Reuters was unable to verify the number of H100 chips DeepSeek has. 'Our review indicates that DeepSeek used lawfully acquired H800 products, not H100,' an Nvidia spokesman said, responding to a Reuters query about DeepSeek's alleged usage of H100 chips. In February, Singapore charged three men with fraud in a case domestic media have linked to the movement of Nvidia's advanced chips from the city state to DeepSeek. China has also been suspected of finding ways to use advanced US chips remotely. While importing advanced Nvidia chips into China without a licence violates US export rules, Chinese companies are still allowed to access those same chips remotely in data centres in non-restricted countries. The exceptions are when a Chinese company is on a US trade blacklist or the chip exporter has knowledge that the Chinese firm is using its chips to help develop weapons of mass destruction. US officials have not placed DeepSeek on any US trade blacklists yet, and have not alleged that Nvidia had any knowledge of DeepSeek's work with the Chinese military. Malaysia's trade ministry said last week that it was investigating whether an unnamed Chinese company in the country was using servers equipped with Nvidia chips for large language model training, and that it was examining whether any domestic law or regulation had been breached. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
2 hours ago
- Business Times
Malaysian PM Anwar's popularity rises even as growth slows
[KUALA LUMPUR] Support for Malaysian Prime Minister Anwar Ibrahim rose as he crossed the midpoint of his five-year term amid political stability. The premier's approval rating stood at 55 per cent as of May, compared with 54 per cent in December and 50 per cent in November 2023, according to a poll by Merdeka Center. The ruling coalition also saw its rating climb to 50 per cent, compared with 40 per cent in June last year. Despite the improvement, negative sentiment towards the country's direction remains 'oversized,' Merdeka Center said. Economic concerns continued to dominate voters' minds as looming US tariffs dim the outlook for the trade-reliant nation. Half of the respondents said the country was headed in the wrong direction, citing unfavourable conditions and the high cost of living, the survey showed. About a third of the respondents cited inflation as their biggest concern, even though it has slowed to 1.4 per cent in April, from as high as 2 per cent last year. Anwar's government is set to introduce an expanded Sales and Services Tax from July and also plans to cut subsidies for its most commonly used petrol this year. The Cabinet has also been rocked by the May 28 resignation of two key ministers, after an internal election for the People's Justice Party that Anwar helms was marred by allegations of vote-rigging and nepotism. Merdeka Center's poll was conducted from May 12 to May 23. BLOOMBERG
