Top-Line Growth Amid Structural Shift
China's national fiscal position through the first five months of 2026 showed moderate resilience, with general public budget revenue reaching 83,404 billion yuan in January–May, up 3.5% year-on-year, according to Ministry of Finance data. National fiscal expenditure reached 94,809 billion yuan in the same period, up only 1.3% — a notably cautious pace of spending growth.
Tax vs Non-Tax Revenue
- Total tax revenue: 68,097 billion yuan, +3.9% YoY
- Non-tax revenue: 15,307 billion yuan, +1.6% YoY
- Central government revenue: 35,474 billion yuan, +4.6% YoY
- Local government revenue: 47,930 billion yuan, +2.7% YoY
The faster growth at the central level partly reflects the shift in economic activity toward larger enterprises — which tend to be centrally affiliated — and away from private and lower-tier businesses still navigating property sector headwinds.
The Land Revenue Gap
The headline budget picture masks a sharp decline in land-lease revenues — an extra-budgetary income stream that historically supplied local governments with 30–50% of their usable funds. With commercial land sales down 24% by volume and 31.5% by value in H1, many lower-tier local governments face significant fiscal gaps. Some have accelerated urban renewal projects as an alternative mechanism to monetise land assets without greenfield sales.
Policy Direction
The government has signalled continued fiscal support for strategic sectors — technology, green transition, affordable housing and domestic consumption — via targeted tax incentives and transfer payments. The expansion of the 300-billion-yuan affordable housing relending facility and subsidy programs across 90 cities reflects this commitment.
Room to Spend
With the headline fiscal deficit within targets and debt-to-GDP still moderate by international standards, Beijing retains fiscal firepower for additional stimulus if H2 growth disappoints against the approximately 5% target.