China’s budget deficit hit an all-time high of 7.75 trillion yuan or $1.1 trillion dollars in 2022, a report by the Ministry of Finance of China said.
The previous year’s deficit was more than double the same period in 2021 and larger than in 2020, when the country’s economy was badly affected by the first outbreak of COVID-19. The Covid Zero policy and the real estate market crisis weighed down on the Chinese economy. As a result, China’s total fiscal spending was expected to total 26.3 trillion yuan in 2022 compared to 24.6 trillion yuan of expenditures in 2021, Finance Minister Liu Kun stated.
The Covid Zero policy was expensive for the Chinese authorities to maintain due to vast spending required to maintain lockdowns and carry out testing of residents. The easing of quarantine restrictions has led to a new upsurge in coronavirus infections, which is expected to drive healthcare spending even higher. The Chinese business confidence index decreased to 48.1 points in December from 51.8 in November, hitting the lowest level in almost 10 years. Furthermore, China’s GDP is expected to grow by just 3% in 2022, its worst performance in nearly half a century.
