China scaled back government spending at its fastest pace in six months in April, a move that contributed to an unexpected slowdown in the economy across the board.
A broad measure of public expenditure fell 7.3% from a year ago, accelerating from the 2.5% decrease in March to mark its sharpest decline since October, according to Bloomberg calculations based on Ministry of Finance data released Wednesday. By contrast, broad fiscal revenue rose 2%.
The data helps explain a surprising contraction in fixed-asset investment that China recorded in April, which followed a rebound earlier this year. Combined with sluggish consumer spending, the investment downturn outweighed booming exports, dragging down overall economic activity.
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Infrastructure-related expenditure under main budget plunged 17.7% in April from a year earlier, worsening from the 8.5% drop in March, according to calculations.
China will likely increase infrastructure spending to shore up growth.
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Some economists estimate that China's economic expansion slowed to roughly 4% in April, tracking below the government's official full-year target of 4.5% to 5%.
