China’s public expenditure declines sharply in August

China’s government spent significantly less in August than it did a year ago, and the pace of that retreat is picking up speed. Public expenditure fell 6.7% year-on-year last month, worsening from a 4.4% decline in July, according to data released by the Ministry of Finance on September 18. The numbers behind the pullback The August figure is not an isolated data point. Broad fiscal spending turned negative year-on-year in several months of 2026, including a particularly steep drop of 11.9% in June before partially recovering in July. The cumulative picture for January through August tells a similar story. General public budget expenditure for those eight months totaled 18.1451 trillion yuan, up just 1.2% year-on-year. Revenue, by contrast, rose 5.7% over the same stretch, reaching 15.6633 trillion yuan. The fiscal deficit for the first eight months of the year narrowed to 5.5 trillion yuan, roughly $821 billion, shrinking by about one-fifth in August alone. There is also a stark divide between how Beijing and local governments are behaving. Central government spending rose 6% year-on-year through August. Local government spending, meanwhile, crept up just 0.3%. Since local governm...