China's Ministry of Finance (MOF) has committed to a more proactive fiscal policy aimed at expanding domestic demand and implementing effective counter-cyclical adjustments. This announcement follows a report on the execution of China's fiscal policy for the first half of 2026, released on Friday.
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In light of complex economic conditions and intertwined risks, the MOF plans to fully utilize existing policies while introducing practical incremental measures responsive to macroeconomic circumstances. The ministry's goals include enhancing domestic demand, optimizing supply, and improving living standards, thus providing robust support for the 15th Five-Year Plan period (2026-2030).
The report emphasized that China's economy showed resilience in the first half of 2026, establishing a solid foundation for stable fiscal operations, with front-loaded expenditures in key areas.
Moving forward, the MOF identified six key priorities. It aims to expedite the allocation and utilization of fiscal funds and government bond issuances to yield tangible results quickly. Special treasury bonds will be issued to bolster eight central financial enterprises, enhancing their capacity to support the real economy.
To broaden domestic demand, the ministry plans to advance major national projects and enhance security capacities in specific sectors. Programs for large-scale equipment renewal and consumer goods trade-ins will also be implemented. An optimized fiscal-financial coordination policy will promote household consumption and attract private investments. Additionally, long-term special treasury bonds and local government bonds will focus on quality productive forces and new urban development.
Other priorities outlined include fostering technological and industrial innovation, improving citizens' livelihoods, mitigating risks in critical areas, and advancing fiscal management reforms. The MOF indicated that further incremental policies will be instituted as conditions develop.
The impacts of this year's initiatives are already evident. Trade-in funds totaling 187.5 billion yuan ($26.4 billion) have driven approximately 1.32 trillion yuan in sales, positively affecting 178 million individuals. The fiscal-financial coordination package, financed by 100 billion yuan in central funds, has reached around 113 million residents and benefited about 6.22 million enterprises, predominantly micro, small, and medium-sized businesses.
As of the end of July, all 800 billion yuan allocated for major projects has been assigned to 1,417 initiatives, with 2.4 trillion yuan in new local special bonds issued, supporting over 18,000 projects. Commentators have praised these measures, highlighting that stronger counter-cyclical adjustments and a refined policy package are vital for stabilizing growth in the fourth quarter, according to Yao Dongmin, a professor at the Central University of Finance and Economics.