Unraveling the Mysteries of China’s Multiple Budgets

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China’s fiscal policy is bewildering. Consider this: four different budgets collectively cover all government revenue and expenditure, but the official deficit -- the main indicator of fiscal policy -- is calculated using only one of them. A considerable part of spending is in the shadows, and some argue the government hides the true size of the deficit. In addition, a lot of liabilities that are ultimately the state’s responsibility aren’t counted on its balance sheet, but on those associated with local governments. That obscures the extent of the national debt -- a key source of stimulus spending employed to respond to shocks such as the coronavirus pandemic.