China’s Fiscal Operations Support Economic Growth
China’s fiscal operations ran smoothly in the first half of 2026, with national general public budget revenue reaching 12.1 trillion yuan, up 4.7% year-on-year, according to data released by the Ministry of Finance and reported by People’s Daily. The steady growth in public finances is providing crucial support for the country’s economic recovery and maintaining economic momentum.
Revenue Recovery Gains Momentum
The cumulative growth rate of fiscal revenue improved month by month through the first half of the year. Tax revenue, the primary component of general public budget revenue, reached 9.79 trillion yuan, up 5.3% year-on-year — an improvement of 3.1 percentage points from the first quarter.
Ma Hongbing, deputy director of the Treasury Department at the Ministry of Finance, attributed the growth to “the strong resilience and vitality of China’s economy,” noting that rising prices, active stock markets, and strong foreign trade growth also supported fiscal revenue gains.
According to Caixin, June fiscal revenue grew 8.7% year-on-year, with tax revenue rising 10.8% — the highest monthly growth of the year — while fiscal expenditure turned from decline to growth. The recovery in revenue growth reflects improving quality, noted Yan Wei, assistant professor at Renmin University School of Finance, as reported by Southern Metropolis Daily. “The recovery in revenue growth this year comes more from tax growth rather than rapid expansion of non-tax revenue, indicating better quality of revenue improvement,” she said.
Local government fiscal revenue also showed resilience, with 28 of 31 provinces recording revenue growth in the first half. All four major regions — East, Central, West, and Northeast — saw growth.
Proactive Fiscal Policy Drives Investment and Consumption
General public budget expenditure reached 14.33 trillion yuan in the first half, up 1.5% year-on-year, with key allocations directed toward health (up 10.8%), social security and employment (up 7.6%), and housing security (up 6.1%).
Special bond issuance has been a key tool for macroeconomic regulation. New local government special bonds totaling 2.07 trillion yuan were issued in the first half, representing 47% of the annual plan of 4.4 trillion yuan. These funds primarily supported municipal and industrial park infrastructure, transport infrastructure, urban renewal, and social services. The “self-review and self-issuance” pilot expanded to include Hebei, Jiangxi, Hubei, and Chongqing, with pilot regions issuing 1.6 trillion yuan of new special bonds by end of June — 77% of the national total.
A notable highlight of this year’s macroeconomic management has been the innovative fiscal-financial coordination policy tool. The central government allocated 100 billion yuan for a package of six policies to boost domestic demand. According to 21st Century Business Herald, new loans in relevant areas — including SME loans, equipment renewal loans, service industry loans, and personal consumption loans — exceeded 17 trillion yuan in the first half, up 4.6% year-on-year.
The consumer goods trade-in program has also been expanded, with 125 billion yuan in subsidies allocated in the first half, driving approximately 1.1 trillion yuan in sales of automobiles, home appliances, and digital products.
Analysis: Policy Coordination and Outlook
Experts see the improving fiscal data as a positive signal for the second half of the year. Luo Zhiheng, chief economist at Yuekai Securities, noted in a CCTV interview that the coordinated domestic demand expansion policy has promoted consumption in areas such as cultural tourism and health, with service industry consumption growth significantly outpacing commodity retail growth.
The Central Political Bureau meeting on July 30 emphasized implementing a more proactive fiscal policy and moderately loose monetary policy, optimizing fiscal-financial coordination policies, and accelerating fiscal expenditure and bond fund usage. Yang Zhiyong, director of the Chinese Academy of Fiscal Sciences, suggested that the focus of accelerating expenditure progress in the second half lies at the local level, particularly in project expenditure.
Ming Ming, chief economist at CITIC Securities, said the coordination between fiscal and monetary policy will no longer be limited to same-direction efforts but will pursue efficient linkage in tool combination, implementation rhythm, and final effects.
What to Watch Next
As gov.cn highlighted, making domestic demand the main driving force of economic development remains a strategic priority. With approximately 48% of the annual budget expended and 47% of special bond quotas issued in the first half, analysts including Yuan Chuang of Caixin Securities expect the second half to show accelerated expenditure and accelerated bond issuance. The improving economic trend is expected to consolidate, continuing to support tax revenue growth.