China to Continue Pursuing a More Proactive Fiscal Policy Next Year; Experts Expect Spending Intensity to Remain "Strong or Stronger"

Following the Central Economic Work Conference held in early December, China’s Ministry of Finance convened a meeting over the weekend, explicitly stating that the country will continue implementing a more proactive fiscal policy next year, expand the fiscal expenditure envelope, and enhance the precision and effectiveness of policies.

Scholars interviewed believe that given the ongoing downward pressure on China’s economy, the intensity of fiscal policy next year is highly likely to remain “strong or stronger.” At the same time, authorities have noted that local government debt issues have not been fundamentally resolved, so central government support for local finances is expected to further increase next year.

According to the Ministry of Finance’s News Office, the National Financial Work Conference was held in Beijing from Saturday to Sunday (December 27–28), summarizing fiscal work in 2025 and outlining key tasks for 2026.

The meeting stated that next year China will continue to implement a more proactive fiscal policy, improve its precision and effectiveness, and focus on “expanding domestic demand, optimizing structure, boosting growth drivers, and benefiting people’s livelihoods.”

In terms of policy wording, the five directions of this year’s more proactive fiscal policy are largely consistent with last year’s, though phrasing has slightly changed. Compared to last year’s explicit calls to “increase spending intensity” and “arrange larger-scale government bonds,” this year’s language shifts to “expand the fiscal expenditure envelope and ensure necessary spending strength,” as well as “optimize the mix of government bond instruments to better leverage bond effectiveness,” indicating greater emphasis on improving fund efficiency.

Meanwhile, the issue of local government debt has moved up from fifth to third place in priority ranking. The phrasing has shifted from “further increasing transfer payments to local governments and strengthening local fiscal capacity” to “enhancing the effectiveness of transfer payment funds and bolstering locally available fiscal resources.”

The meeting also laid out six key tasks for next year’s fiscal work: adhering to domestic demand-led growth, fostering and expanding new growth drivers, advancing integrated urban-rural development, strengthening livelihood protection, promoting comprehensive green transformation of economic and social development, and enhancing international financial and economic cooperation.

On fiscal discipline, the meeting stressed comprehensively strengthening scientific fiscal management, consistently enforcing the principle of “tight budgets” for Party and government agencies, maintaining strict oversight of government debt, and advancing the establishment of a sound state asset management system.

Regarding consumer stimulus measures drawing public attention, Finance Minister Lan Fuan clearly stated at the meeting that next year the government will continue supporting policies for trade-ins of consumer goods, promote employment and income growth for residents, and further increase fiscal investment in education.

Scholars: Local Debt Issues Not Yet Fundamentally Resolved

Dr. Chen Bo, Senior Research Fellow at the East Asian Institute of the National University of Singapore, told Lianhe Zaobao that since China’s overall economic situation has not undergone fundamental change, fiscal spending intensity next year should remain “strong or stronger.”

He said the government will continue to intensify fiscal support for key sectors and industries, including high-tech, consumption, and livelihood areas.

Regarding the elevated priority given to local fiscal issues, Chen noted this signals that central government support for local finances may further strengthen next year, also reflecting a certain lag in information flow at the central level—local debt problems have accumulated over time and remain unresolved at their root.

“On one hand, we need to help local governments resolve debt; on the other, we must provide them with adequate fiscal space so they can fulfill various safeguarding and construction responsibilities with at least basic financial resources,” he said.

Shen Hong, Director and Research Fellow at the Domestic Think Tank Office of the Institute of New Structural Economics at Peking University, also pointed out that debt management was one of the focal points of this year’s National Financial Work Conference. “Debt resolution must be genuine and substantive—not creating new debt under the guise of resolving old debt—but rather steadily narrowing the debt pipeline.”

Shen likewise believes fiscal policy next year will be more proactive than this year’s, and implemented in a more precise and effective manner, avoiding “flooding-style” stimulus.

He explained that last year’s fiscal policy appeared more forceful due to external uncertainties, particularly the trade war initiated by the Trump administration in the U.S. “At that time, policies reserved greater flexibility. Now that we’ve weathered the trade war, authorities can adopt a more refined approach to domestic economic development.”

China to Continue Pursuing a More Proactive Fiscal Policy Next Year; Experts Expect Spending Intensity to Remain "Strong or Stronger"

Following the Central Economic Work Conference held in early December, China’s Ministry of Finance convened a meeting over the weekend, explicitly stating that the country will continue implementing a more proactive fiscal policy next year, expand the fiscal expenditure envelope, and enhance the precision and effectiveness of policies.

Scholars interviewed believe that given the ongoing downward pressure on China’s economy, the intensity of fiscal policy next year is highly likely to remain “strong or stronger.” At the same time, authorities have noted that local government debt issues have not been fundamentally resolved, so central government support for local finances is expected to further increase next year.

According to the Ministry of Finance’s News Office, the National Financial Work Conference was held in Beijing from Saturday to Sunday (December 27–28), summarizing fiscal work in 2025 and outlining key tasks for 2026.

The meeting stated that next year China will continue to implement a more proactive fiscal policy, improve its precision and effectiveness, and focus on “expanding domestic demand, optimizing structure, boosting growth drivers, and benefiting people’s livelihoods.”

In terms of policy wording, the five directions of this year’s more proactive fiscal policy are largely consistent with last year’s, though phrasing has slightly changed. Compared to last year’s explicit calls to “increase spending intensity” and “arrange larger-scale government bonds,” this year’s language shifts to “expand the fiscal expenditure envelope and ensure necessary spending strength,” as well as “optimize the mix of government bond instruments to better leverage bond effectiveness,” indicating greater emphasis on improving fund efficiency.

Meanwhile, the issue of local government debt has moved up from fifth to third place in priority ranking. The phrasing has shifted from “further increasing transfer payments to local governments and strengthening local fiscal capacity” to “enhancing the effectiveness of transfer payment funds and bolstering locally available fiscal resources.”

The meeting also laid out six key tasks for next year’s fiscal work: adhering to domestic demand-led growth, fostering and expanding new growth drivers, advancing integrated urban-rural development, strengthening livelihood protection, promoting comprehensive green transformation of economic and social development, and enhancing international financial and economic cooperation.

On fiscal discipline, the meeting stressed comprehensively strengthening scientific fiscal management, consistently enforcing the principle of “tight budgets” for Party and government agencies, maintaining strict oversight of government debt, and advancing the establishment of a sound state asset management system.

Regarding consumer stimulus measures drawing public attention, Finance Minister Lan Fuan clearly stated at the meeting that next year the government will continue supporting policies for trade-ins of consumer goods, promote employment and income growth for residents, and further increase fiscal investment in education.

Scholars: Local Debt Issues Not Yet Fundamentally Resolved

Dr. Chen Bo, Senior Research Fellow at the East Asian Institute of the National University of Singapore, told Lianhe Zaobao that since China’s overall economic situation has not undergone fundamental change, fiscal spending intensity next year should remain “strong or stronger.”

He said the government will continue to intensify fiscal support for key sectors and industries, including high-tech, consumption, and livelihood areas.

Regarding the elevated priority given to local fiscal issues, Chen noted this signals that central government support for local finances may further strengthen next year, also reflecting a certain lag in information flow at the central level—local debt problems have accumulated over time and remain unresolved at their root.

“On one hand, we need to help local governments resolve debt; on the other, we must provide them with adequate fiscal space so they can fulfill various safeguarding and construction responsibilities with at least basic financial resources,” he said.

Shen Hong, Director and Research Fellow at the Domestic Think Tank Office of the Institute of New Structural Economics at Peking University, also pointed out that debt management was one of the focal points of this year’s National Financial Work Conference. “Debt resolution must be genuine and substantive—not creating new debt under the guise of resolving old debt—but rather steadily narrowing the debt pipeline.”

Shen likewise believes fiscal policy next year will be more proactive than this year’s, and implemented in a more precise and effective manner, avoiding “flooding-style” stimulus.

He explained that last year’s fiscal policy appeared more forceful due to external uncertainties, particularly the trade war initiated by the Trump administration in the U.S. “At that time, policies reserved greater flexibility. Now that we’ve weathered the trade war, authorities can adopt a more refined approach to domestic economic development.”