Chart of the Week: The Fiscal Picture in China, 2020

By Yinan Zhang

China has implemented a large fiscal stimulus in 2020 to counter the negative economic impact of COVID-19. 

Up to September 2020, the fiscal support amounted to $707 billion (roughly 4.8 trillion renminbi) through spending and revenue measures (above-the-line (ATL) measures) and another $198 billion in liquidity support. 

The health-sector related spending accounts for only a small share (0.1 percent of GDP). By contrast, other G20 emerging market economies health-sector related spending amounted to 0.5 percent of GDP. 

Compared to other G20 emerging market economies, China’s package is smaller in percent of GDP, but has relied more heavily on ATL measures (Exhibit 1). In absolute terms, the ATL package in 2020 has also been larger than the stimulus during the Global Financial Crisis (4 trillion renminbi), although the fiscal impulse at the time was much bigger (12.5 percent of GDP).

Overall, China has relied more heavily on expenditure and revenue-related measures than their G20 counterparts, while liquidity support such as guarantees and equity injections, have been used less frequently.