China reports rare drop in fiscal spending in October but no policy shift seen

BEIJING Government spending in China posted a rare drop in October, but still surged 10 percent in the first 10 months of the year as officials looked to shore up economic growth.

A 12.5 percent decline in fiscal spending in October from a year earlier was largely due to a high base of comparison with the same period last year, the Ministry of Finance said on Monday.

Most analysts believe the government will have to continue its robust spending amid growing domestic and global economic uncertainties, though top officials are also increasingly concerned about the dangers posed by rising levels of debt.

Central government spending rose 5.6 percent in October from a year earlier, while spending by local governments dipped 15.5 percent, the ministry said in a statement on its website.

China has relied more heavily on infrastructure spending to stabilize growth this year as private companies pull back on investment, but concerns about growing debt levels are increasing.

Overall government revenues rose 5.9 percent, up from 4.9 percent in September.

Government revenues rose 5.9 percent in the first 10 months of the year.

That implied a fiscal deficit of 1.1 trillion yuan ($161.17 billion)in the January-October period, narrowing from 1.46 trillion yuan in the first nine months, which was equivalent to 2.7 percent of gross domestic product, according to Reuters calculations.

China is aiming for a 3 percent fiscal deficit this year, though some economists believe it may be higher.

Last week, China appointed Xiao Jie as new finance minister who is expected to maintain an expansionary fiscal policy and push reforms to put a lid on mounting debt levels.

Some central bank officials have said China has room to raise its fiscal deficit ratio to between 4 and 5 percent to more effectively boost the economy.

(Reporting by Beijing Monitoring Desk- Editing by Kim Coghill)