(Bloomberg) -- China’s budget deficit continued to contract so far this year, as government revenue grew from a favorable comparison base in Covid-hit 2022 while spending declined. 

The broadest measure of the fiscal gap — the so-called augmented deficit — was 6.96 trillion yuan ($980 billion) in the first 11 months of this year, down 10.2% from the same period last year, according to Bloomberg calculations based on data released by the Ministry of Finance on Friday.

Total revenue rose 2.6% on year to 25.2 trillion yuan in the period, while spending was down 0.5% in the period to 32.2 trillion yuan. Land sales revenue was 4.2 trillion yuan for January-November, down 17.9% on year, as the housing market slumps persisted.

The declined spending suggests slow fiscal support to aid an uncertain recovery from the pandemic. But fiscal measures are expected to play a main role next year in bolstering China’s growth as top leaders vowed to strengthen fiscal policy “appropriately” at recent meetings discussing key economic policy for 2024.

The economy remains dragged by the property market downturn and subdued domestic demand. Official data published earlier Friday showed growth in retail sales and fixed-asset investment missed expectations in November. Industrial output increased faster than forecast, largely due to a low base of comparison a year ago.

READ: China’s Gloomy Economic Data Paints ‘Dire’ Growth Picture (3)

Chinese policymakers have agreed to run a budget deficit of 3% of gross domestic product next year and the government could sell 1 trillion yuan in special sovereign bonds to pay for extra expenditures, Reuters reported Friday, citing three unidentified people with knowledge of the matter.

The authorities have ramped up fiscal stimulus since late October, raising 2023’s official deficit to 3.8% to GDP in a rare mid-year move through the issuance of an additional 1 trillion yuan of sovereign bonds for spending in disaster relief work. Half of the funds will be saved for investment in the coming year, they have said.

Note: A positive number for balance means surplus, while a negative figure indicates deficit.

This story was produced with the assistance of Bloomberg Automation.

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