China Struggling to Meet Its Spending Targets

Local officials concerned about how they will be assessed on investment returns

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BEIJING — As Mr Elon Musk targets US$1 trillion (S$1.34 trillion) in cuts to the US government's outlay in 2025, China is facing a different problem: It is struggling to spend enough money to get the economy moving again.

Over the past six years, the combined expenditure in the Chinese government's two major budgets fell short of the annual plan by at least 1.4 per cent, according to Bloomberg calculations based on official data. That is largely because the authorities are struggling both to generate income and find enough viable investment projects that can produce a decent return.

Despite single-party political rule that might suggest a lack of roadblocks to enacting policy, China's system has been tripped up by local officials not following Beijing's directives. In some cases, the regional authorities are concerned about how they will be evaluated on investment returns, according to Morgan Stanley analysis. Chinese President Xi Jinping's broad anti-corruption campaign may also continue to weigh.