China is gearing up to adopt a more proactive fiscal policy, signaling a significant increase in government spending aimed at stimulating economic growth. According to a government work report submitted on Wednesday to the national legislature, China has set its deficit-to-GDP ratio for this year at around 4 percent, up by one percentage point from last year.
The government deficit is projected at 5.66 trillion yuan (about $780 billion), marking an increase of 1.6 trillion yuan over last year’s budget. This move reflects China’s commitment to bolstering its economy amid global uncertainties.
In a bid to enhance fiscal spending, China plans to issue a total of 1.3 trillion yuan in ultra-long special treasury bonds in 2025, an uptick of 300 billion yuan compared to the previous year. The government’s new debt issuance for 2025 is expected to total 11.86 trillion yuan, increasing by 2.9 trillion yuan from last year.
Furthermore, the report outlines plans to issue 4.4 trillion yuan in local government special-purpose bonds in 2025, an increase of 500 billion yuan over last year. These bonds will primarily support areas such as infrastructure investment, land acquisition and reserves, purchasing commodity housing stock, and settling overdue payments owed by local governments to enterprises.
This expanded fiscal policy indicates China’s efforts to inject vitality into its economy, potentially offering increased opportunities for global trade and investment partnerships, especially with developing nations.
