State Council Meeting: Formulate a National Unified Negative List for Local Fiscal Subsidies

On March 13, Premier Li Qiang presided over an executive meeting of the State Council to discuss and approve the “2026 Key Work Division Plan of the State Council,” study the establishment of a negative list management mechanism for local fiscal subsidies, and review the “Regulations on the National Agricultural Census (Revised Draft).”

The meeting emphasized that all departments and units should proactively take responsibility, enhance their sense of urgency and execution, focus on the key tasks outlined in the government work report, and work diligently to improve quality and efficiency. Practical and effective policy measures should be implemented to accelerate the implementation and results of various tasks. Strengthening follow-up supervision and coordination, conducting timely evaluations of important policies and key issues, and establishing a full-process closed-loop management system are necessary.

The meeting pointed out that standardizing local fiscal subsidy policies is of great significance for maintaining fair competition in the market and advancing the construction of a unified national market. Based on previous work, a negative list management system for local fiscal subsidies should be implemented, and a unified national negative list for local fiscal subsidies should be formulated to further clarify specific circumstances where local governments are prohibited from providing subsidies.

By 2025, the Ministry of Finance, together with relevant departments, has formed a cross-departmental task force to carry out special rectification of local fiscal subsidies. Deputy Minister Liao Min stated at a press conference held by the State Council Information Office on January 20 that China’s technological progress and competitive advantage rely not on subsidies but on continuous R&D investment by Chinese enterprises and the hard work of countless entrepreneurs. The central government attaches great importance to and resolutely corrects any illegal subsidy behaviors that may exist in some localities.

“We will continue to improve the working mechanism of the task force, strengthen information sharing and regulatory coordination, establish a sound system for the standardized management of fiscal subsidies, and deepen the work of cleaning up and standardizing,” said Liao Min.

During the National Two Sessions this year, Zhang Lianqi, a standing member of the National Committee of the Chinese People’s Political Consultative Conference, president of the China Enterprise Financial Management Association, and vice president of the Chinese Taxation Society, told Securities Times reporters that building a unified national market depends on breaking down local protectionism and administrative monopolies, cleaning up and standardizing various tax incentives and fiscal subsidy policies, and creating a fair competitive market environment.

Luo Zhiheng, chief economist at Yuekai Securities, pointed out that some regions engage in vicious competition for tax sources and projects through aggressive subsidies, creating policy gaps and market barriers, which exacerbate regional development disparities. Standardizing tax incentives and fiscal subsidy policies can help break down barriers, optimize resource allocation, and promote regional coordinated development. Overly generous incentives or subsidies may lead enterprises to seek rent-seeking rather than innovation, causing blind investments and overcapacity. Regulating subsidies can guide enterprises to focus on innovation and efficiency, enhance core competitiveness, and support high-quality development.

Zhang Lianqi suggested that the scope of cleanup should focus on tax incentive policies that have already achieved phased goals or those that trigger “involutionary” competition. Behaviors such as local illegal tax rebates and the formation of “tax havens” should also be firmly rectified and eliminated to break market segmentation and uphold the rules of a unified national market. While cleaning up and standardizing various tax incentive policies, “strategic” tax incentives should continue to be preserved and strengthened.