China’s finance ministry has signalled a clear, active fiscal stance for 2026 that emphasises scale, re‑allocation and efficiency. Deputy Minister Liao Min told a January press briefing that fiscal policy next year will be summed up as “more total, better structure, higher efficiency, stronger momentum,” pledging hard support for employment, firms, markets and expectations as Beijing seeks a good start to the 15th Five‑Year Plan period.
The “more total” commitment means a larger spending envelope and an unabated appetite for fiscal deficits and borrowing relative to recent years. Officials say the 2026 deficit will exceed the roughly ¥5.66 trillion benchmark set in 2025 — a figure tied to a headline deficit ratio of about 4% — and that nominal bond and spending totals will expand even if the deficit ratio were held steady as GDP grows.
That expansion will be deliberate rather than indiscriminate. Liao stressed sustainability and long‑term fiscal health, signalling that Beijing wants to avoid simple “big bang” stimulus and instead preserve room to manoeuvre over the medium term. The message is continuity with last December’s Central Economic Work Conference: keep policy active but precise, and avoid eroding future fiscal capacity.
“Better structure” is the second plank. Finance ministry rhetoric and recent spending trends show a tilt away from pure hard‑infrastructure and toward consumption, human capital and social protection — what officials call “investing in people.” Beijing plans to press zero‑base budgeting, prune low‑efficiency outlays and shift resources into items such as healthcare, education, social security and measures to boost household incomes and consumption.
Officials are already acting on that shift. Through November 2025, spending on science, culture, social security and health rose faster than headline outlays, and pilot measures this year — from childcare subsidies to interest subsidies for consumer loans — have been rolled out to nudge private spending and ease household cost burdens. The aim is to stimulate domestic demand and create a more resilient, consumption‑led growth engine.
“Higher efficiency” describes how Beijing intends to squeeze more bang from fiscal buck. The ministry plans further use of ultra‑long special sovereign bonds and a tighter, more performance‑oriented management of special local bonds, including negative‑lists for projects and pilots that let localities self‑review issuance. Authorities also want closer fiscal‑financial coordination and new policy instruments to amplify public funds’ leverage over private investment.
Those instruments already had measurable effects in 2025: ¥1.3 trillion of ultra‑long special sovereign bonds supported thousands of projects, helped spur over ¥1 trillion of total investment, and backed consumer stimulus that translated into trillions of yuan of sales. The ministry’s task in 2026 will be to better target such tools to projects with high economic multipliers and clearer repayment or social returns.
Finally, “stronger momentum” refers to structural reforms aimed at unblocking local financing and market frictions. Changes on the agenda include optimizing transfer payments to boost local fiscal autonomy, cleaning up and standardising tax breaks and subsidies to help build a single national market, and refining budget performance management. These steps are meant to unleash local initiative while reducing distortions that have encouraged protected, inefficient industries.
The package is consequential for both domestic and global audiences. For China it signals a pivot from crisis‑style stimulus toward a more surgical, demand‑oriented agenda designed to stabilise jobs and expectations without sacrificing fiscal sustainability. For world markets and commodity exporters, the balance Beijing strikes between size and precision will influence Chinese import demand, infrastructure orders and cross‑border investment flows.
Execution risks remain material. Local governments’ capacity to implement zero‑base budgeting, to identify high‑return projects and to manage rising nominal debt will determine whether the plan bolsters growth sustainably or simply swaps one set of imbalances for another. International investors should watch the composition of bond issuance, the pace of special bond placement, and how quickly reforms to tax preferences and transfer payments are enacted.
Taken together, the 2026 fiscal blueprint is a pragmatic attempt to thread a policy needle: expand support where it matters most, improve the quality of spending, and use institutional reforms to make fiscal expansion go further without destabilising public finances. The coming year will test whether Beijing can turn that intention into measurable, durable gains for the economy.