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

By Reporter Han Yu

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 stabilize employment, enterprises, markets, and expectations, promote reforms, strengthen management, prevent risks, and increase efficiency. These efforts aim to achieve qualitative improvements and reasonable quantitative growth in the economy, maintain social harmony and stability, and provide strong support for a good start to the “14th Five-Year Plan.”

In 2026, 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 resources; 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 microeconomic vitality. Key tasks include supporting the development of a strong domestic market, accelerating the cultivation and expansion of new drivers of growth, 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 continue to implement fiscal subsidy policies for specialized, refined, distinctive, and innovative SMEs.

On accelerating high-level technological self-reliance, the Report states that efforts will be increased, a diversified innovation investment mechanism will be improved, and more social and financial capital will be mobilized for technological innovation. The structure of science and technology expenditure will be optimized, with a focus 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 given to the construction of international science and technology innovation centers in Beijing (Jing-Jin-Ji), Shanghai (Yangtze River Delta), and the Guangdong-Hong Kong-Macau Greater Bay Area, guiding localities to develop regional innovation hubs aligned with national strategic needs and local industrial development.

In increasing efforts to safeguard and improve people’s livelihoods, the Report emphasizes strengthening employment support to stabilize and expand employment for key groups. It will further increase fiscal investment in education, implement policies for gradually providing free preschool education, and ensure student financial aid. The per capita fiscal subsidy standard for urban and rural residents’ basic medical insurance will be raised, and healthcare service capacity and security levels will be improved. The social security system will be improved, including increasing basic pensions for urban and rural residents. Support will be provided for elderly with moderate or higher disabilities through pension service subsidies, and childcare subsidies will be implemented. A tiered and categorized social assistance system will be developed. Disaster prevention and mitigation capacity will be strengthened, emergency rescue support enhanced, and cultural and sports development promoted.

(Edited by Wen Jing)

Keywords: Fiscal Policy