Ministry of Finance: Continue to Implement a More Proactive Fiscal Policy in 2026

On March 17, the Ministry of Finance released the “2025 China Fiscal Policy Implementation Report” (hereinafter referred to as the “Report”). The Report shows that in 2025, China’s economy operated steadily with progress, and fiscal operations remained stable and orderly. Fiscal departments at all levels strengthened resource coordination, maintained necessary expenditure levels, and ensured good support for key areas.

The Report states that 2026 marks the beginning of the “14th Five-Year Plan.” The Ministry of Finance will continue to implement more proactive fiscal policies, improving precision and effectiveness, optimizing incremental growth, revitalizing stock, focusing on expanding domestic demand, improving structure, increasing momentum, and benefiting people’s livelihoods. It will also focus on stabilizing employment, enterprises, markets, and expectations; promoting reforms, strengthening management, preventing risks, and increasing efficiency. These efforts aim to achieve qualitative improvement and reasonable quantitative growth of the economy, maintain social harmony and stability, and provide strong support for a good start to the “14th Five-Year Plan.”

In 2026, the implementation of more proactive fiscal policies will continue, mainly reflected in five aspects: First, expanding the fiscal expenditure scope to ensure necessary spending. Second, optimizing the government bond tool mix to better leverage bond benefits. Third, improving the efficiency of transfer payments to enhance local autonomous financial capacity. Fourth, continuously optimizing the expenditure structure and strengthening support in key areas. Fifth, strengthening fiscal and financial coordination to amplify policy effects and better stimulate micro-entity vitality. Key tasks include supporting the development of a strong domestic market, accelerating the cultivation and expansion of new growth drivers, speeding up high-level technological self-reliance, increasing efforts to safeguard and improve people’s livelihoods, promoting new urbanization and regional coordinated development, accelerating green transformation, and strengthening scientific fiscal management.

Regarding support for building a strong domestic market, the Report clarifies that it will continue to allocate ultra-long special national bonds for “dual” construction and “two new” initiatives, and optimize policy implementation. It will implement a package of fiscal and financial coordination policies to boost domestic demand, focusing on stimulating private investment and promoting resident consumption, supporting reductions in corporate financing costs, enhancing residents’ consumption capacity, and expanding supply of quality services.

To support the cultivation and expansion of new growth drivers, the Report proposes rolling out high-quality development actions for key manufacturing industry chains. It will use special funds, government investment funds, and financing guarantees to support high-tech enterprises and technology-based small and medium-sized enterprises. It will also continue to implement fiscal awards and subsidies for specialized, refined, distinctive, and innovative SMEs.

In accelerating high-level technological self-reliance, the Report emphasizes increasing investment, establishing diversified innovation funding mechanisms, and mobilizing more social capital and financial resources into technological innovation. It aims to optimize the structure of science and technology expenditure, focusing further on basic research, applied basic research, and national strategic technological tasks to stimulate innovation vitality. It will promote integrated development of education, science, technology, and talent. Support will be provided for the construction of international science and technology innovation centers in Beijing (including Tianjin-Hebei), Shanghai (Yangtze River Delta), and the Guangdong-Hong Kong-Macau Greater Bay Area. Localities will be guided to align with national strategic needs and local industrial development to create distinctive regional innovation hubs.

In increasing efforts to safeguard and improve people’s livelihoods, the Report states that employment support will be strengthened to stabilize and expand employment for key groups. Fiscal investment in education will be increased, and the gradual implementation of free preschool education policies and student financial aid will be carried out. The per capita fiscal subsidy standard for urban and rural residents’ basic medical insurance will be raised, along with improvements in healthcare service capacity and security levels. The social security system will be improved, including increasing basic pensions for urban and rural residents. Support will be provided for pension subsidies for moderately and severely disabled elderly persons, and a childcare subsidy system will be implemented. A tiered and categorized social assistance system will be developed. Disaster prevention and mitigation capacity will be strengthened, along with emergency rescue guarantees. Support for cultural and sports development will also be enhanced.

(Edited by: Wen Jing)

Keywords: Fiscal Policy