China's finance ministry pledges vigorous, effective implementation of more proactive fiscal policy

BEIJING - China's Ministry of Finance said on Friday it would vigorously and effectively implement a more proactive fiscal policy, step up counter-cyclical adjustments, and introduce additional measures in a timely manner in response to macroeconomic developments.

In a report on the implementation of China's fiscal policy in the first half of 2026, the ministry said it would make full use of existing policy measures while planning and rolling out practical and effective new measures as needed, with a focus on expanding domestic demand, improving supply and safeguarding people's livelihoods.

The ministry said it would accelerate the allocation and use of fiscal funds, optimize the structure of government expenditure, and improve spending efficiency. It also pledged to expedite the issuance and use of government bonds to support project implementation.

Special treasury bonds will be issued to inject capital into eight central financial institutions, strengthening their resilience to risks and ability to serve the real economy, according to the report.

China has pledged to continue implementing a more proactive fiscal policy in 2026, with the deficit-to-GDP ratio set at around 4 percent and the total government deficit at 5.89 trillion yuan ($875 billion), this year's government work report noted. Expenditure in the general public budget is, notably, projected to reach 30 trillion yuan for the first time.

China's gross domestic product, meanwhile, grew 4.7 percent year-on-year in the first half of 2026, the National Bureau of Statistics has revealed.

During this same period, China's general public budget expenditure rose 1.5 percent year-on-year to 14.33 trillion yuan, with spending on healthcare and on social security and employment increasing by 10.8 percent and 7.6 percent, respectively, official data showed.

By the end of June, the central government had allocated 9.4 trillion yuan in transfer payments to local governments, accounting for 90.3 percent of the annual budget. Authorities also allocated 125 billion yuan in subsidies for consumer goods trade-in programs, helping generate roughly 1.1 trillion yuan in sales.

Fiscal policy support has also been reinforced via closer coordination with financial measures to stimulate investment and consumption.

This year, the central government earmarked 100 billion yuan for a package of six coordinated fiscal and financial policy tools aimed at boosting domestic demand. In the first seven months, these measures supported more than 20 trillion yuan in newly extended credit to relevant sectors, up 4.5 percent year-on-year, finance ministry data revealed.

Four investment-focused measures supported approximately 1.51 trillion yuan in private investment, while two consumption-focused measures supported around 1.88 trillion yuan in household consumption during the same period.

Authorities have also expanded interest subsidies for personal consumption loans and loans to micro, small and medium-sized enterprises and service-sector businesses, while introducing a new mortgage interest subsidy policy for eligible first-time homebuyers.

The mortgage policy, which took effect on Oct 1 with a tentative implementation period of one year, provides an annualized interest subsidy of 1 percentage point on eligible commercial mortgage loans for first homes, with the subsidy period extending up to five years. This measure is intended to reduce borrowing costs for eligible homebuyers and support housing demand.

Looking ahead, the ministry said it would also support efforts to expand domestic demand on all fronts, promote technological and industrial innovation, safeguard and improve people's well-being, prevent and defuse risks in key areas, and deepen fiscal management reforms.