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China Pledges More Proactive Fiscal Policy, Allocates ¥550B in Debt Quotas
The Finance Ministry said Oct 9 it would "vigorously and effectively" implement a more proactive fiscal policy; ¥550B in unused local-government debt quotas were allocated the same day, ¥300B to keep county-level governments running.
Why it matters
This is the largest year-end fiscal push of 2024–2026: ¥550B (~US$82B) in debt quota reallocation plus roughly ¥1.55T in Q4 local-government bond issuance, alongside special treasury bonds recapitalizing eight central financial institutions — a clear counter-cyclical package. Verified figures only; no market outlook implied.
Full report
China's Ministry of Finance said on Oct 9 it would "vigorously and effectively" implement a more proactive fiscal policy, stepping up counter-cyclical adjustment and rolling out incremental measures as warranted, in its report on H1 2026 fiscal policy implementation (Xinhua, Oct 9).
The same day, it allocated ¥550B in unused local-government debt quotas: ¥300B to support county- and district-level government operations (wages, basic services), the rest for infrastructure projects — the biggest such year-end allocation in three years (Reuters, Oct 9).
The package also includes special treasury bond issuance to inject capital into eight central financial institutions and enterprises, strengthening risk resilience and service to the real economy. Q4 local-government bond issuance is expected at about ¥1.55T (~US$232B), combining the ¥1T remaining quota and the ¥550B carryover.
2026 framework: deficit-to-GDP ratio of about 4%, total deficit ¥5.89T, and general public budget expenditure projected to exceed ¥30T for the first time. H1 GDP grew 4.7% YoY; H1 budget expenditure was ¥14.33T (+1.5% YoY), with healthcare +10.8% and social security and employment +7.6%.
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