The Ministry of Finance of China File Photo: VCG

China will carry out a more proactive fiscal policy in 2026, according to a fiscal policy execution report seen on the Finance Ministry's website on Tuesday. 

Experts said that a more proactive fiscal policy, underpinned by a larger scale of fiscal spending, will spur domestic demand and boost economic growth in 2026.

The ministry reiterated its focus on strengthening domestic demand, stabilizing employment, and deepening reform.

The ministry will continue to implement a more proactive fiscal policy while improving its precision and effectiveness, and concentrate on expanding domestic demand, improving the economic structure, boosting growth drivers and benefiting people's livelihoods, said the report. 

It will work to stabilize employment, enterprises, markets and expectations, push forward reforms, strengthen management, guard against risks and raise efficiency. The ministry will continue to promote qualitative improvements and reasonable quantitative growth in the economy, and maintain social harmony and stability, in order to strive for a good start to the 15th Five-Year Plan (2026-30).

More efforts will be made to expand the overall scale of fiscal spending to ensure sufficient support for necessary expenditures, optimize the mix of government bond instruments to better harness their effectiveness, and improve the efficiency of transfer payments to strengthen local governments' discretionary fiscal capacity. 

The expenditure structure will continue to be optimized this year, fiscal support for key sectors will be reinforced, and fiscal and financial policy coordination will be enhanced.

Finance Minister Lan Fo'an told a press conference on March 6 in Beijing that China's fiscal fund allocation is expected to reach record highs in terms of total expenditure, the scale of new government bond issuance, and central government transfer payments to local governments, the Xinhua News Agency reported.

To launch major construction projects as early as possible, the ministry said that it has allocated part of the 2026 quota for new local government debt to secure funding for major projects in the first quarter of 2026, to replenish local government fund resources, and to consolidate the positive momentum of the economic recovery.

The ministry said that China's general public budget revenue hit 21.6 trillion yuan ($3.13 trillion) last year. 

Fiscal policies are important macroeconomic tools to stimulate economic growth, and they are also important for achieving long-term development goals, Li Changan, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Tuesday. 

Li said that appropriately expanding the scale of fiscal expenditure and increasing the deficit-to-GDP ratio will help spur domestic demand and promote economic growth. Fiscal policies have increasingly relied on bonds, especially long-term treasury bonds, which have played a significant role in expanding investment and stimulating consumption. 

The ministry report outlined seven key tasks for this year, with maintaining a strong and dynamic domestic market being the top priority. 

China will continue to allocate ultra-long-term special treasury bonds to support major national strategies and capacity building in key areas related to national security ("two major priorities"), as well as a new round of large-scale equipment upgrades and consumer goods trade-in programs ("two new initiatives"), said the ministry report.

A comprehensive package of fiscal and financial policies to stimulate domestic demand will be implemented, focusing on stimulating private investment and promoting consumer spending, and expanding the supply of high-quality services, said the report.

In terms of improving people's livelihoods, the ministry called for strengthening employment assistance to stabilize urban employment, increasing fiscal investment in education, raising the per capita fiscal subsidy for basic medical insurance for urban and rural residents, enhancing the capacity and quality of medical and health services, and improving the social security system.
 
Li said that the measures will support job creation and income growth, ensure high-quality education, enhance medical and health services, and improve the social security system.

The ministry said that China will speed up the cultivation and expansion of new growth drivers and promote the high-quality development of major manufacturing industry supply chains. It also called for sustained increases in investment, and improvement of a diversified funding mechanism to bolster technology innovation, by using more private capital and other financial resources.