On 11 March 2026, the Fourth Session of the 14th National People’s Congress (NPC) adopted the policy document “Resolution of the Fourth Session of the 14th National People’s Congress on the Implementation of the 2025 Central and Local Budgets and the 2026 Central and Local Budgets” . The resolution reviewed the execution of fiscal policy in 2025 and approved the budget framework for 2026.

The document forms part of the broader policy framework presented during the annual “Two Sessions”, where China’s leadership outlines the economic policy agenda for the coming year. The 2026 budget reflects continued efforts to stabilize economic growth, strengthen domestic demand, and address structural challenges in areas such as local government debt and fiscal sustainability.

Executive Summary

• On 11 March 2026, the Fourth Session of the 14th National People’s Congress adopted the Resolution on the Implementation of the 2025 Central and Local Budgets and the 2026 Central and Local Budgets.
• The resolution reviewed fiscal performance in 2025 and approved the 2026 national budget framework proposed by the State Council.
• In 2025, national general public budget revenue reached RMB 216.0 trillion, while total expenditure reached approximately RMB 287.4 trillion.
• For 2026, China plans general public budget expenditure of RMB 300.1 trillion, reflecting an increase of approximately 4.4 percent compared with the previous year.
• The national fiscal deficit is planned at approximately RMB 5.89 trillion, corresponding to a deficit ratio of around 4 percent of GDP.
• Policy priorities include strengthening domestic demand, optimizing fiscal spending structures, addressing local government debt risks, and supporting high-quality economic development.

The Role of the National People’s Congress in Fiscal Governance

China’s national budget is formally reviewed and approved by the National People’s Congress, the country’s highest legislative body. Each year, the State Council submits the “Report on the Implementation of the Central and Local Budgets and the Draft Central and Local Budgets” to the NPC for examination.

During the Fourth Session of the 14th National People’s Congress, delegates reviewed the report on 2025 budget execution and the 2026 budget proposal submitted by the State Council. The NPC Financial and Economic Affairs Committee conducted a detailed review of the fiscal report before recommending that the legislature approve the proposed budget framework.

Following deliberations, the NPC adopted the resolution approving the fiscal report and the 2026 central government budget. The decision also approved limits for local government general and special bond issuance, which remain important financing tools for infrastructure investment and regional development.

Fiscal Performance in 2025

The resolution confirmed that China’s fiscal operations in 2025 remained broadly stable, despite a complex domestic and international economic environment.

According to the budget execution report, national general public budget revenue reached RMB 216.045 trillion, representing approximately 98.3 percent of the planned budget target. Total general public budget expenditure reached approximately RMB 287.395 trillion, equivalent to 96.8 percent of the planned level.

Several factors influenced fiscal outcomes during the year. A notable development was the decline in local government land-transfer revenues, which have historically been a significant source of fiscal income for local governments. Lower land sales, linked in part to adjustments in the real estate sector, reduced government revenue and contributed to adjustments in expenditure plans.

At the same time, fiscal authorities continued to maintain overall debt levels within limits approved by the National People’s Congress. By the end of 2025, central government debt and local government debt remained within legally authorized ceilings.

The Fiscal Policy Framework for 2026

The 2026 national budget reflects the government’s objective of maintaining macroeconomic stability while supporting structural economic transformation.

The approved fiscal plan sets national general public budget revenue at RMB 220.7 trillion, representing moderate growth compared with the previous year. Planned expenditure is significantly higher at RMB 300.1 trillion, indicating an expansionary fiscal stance aimed at supporting economic growth.

The resulting fiscal gap translates into a planned national deficit of approximately RMB 5.89 trillion, corresponding to a deficit ratio of around 4 percent. Compared with the previous year, the deficit level increased modestly, reflecting the government’s willingness to use fiscal policy to stabilize economic activity.

In addition to the general public budget, the fiscal framework also includes government-managed funds, state capital operating budgets, and social insurance funds. These components collectively shape China’s overall fiscal landscape.

Addressing Local Government Debt Risks

Managing local government debt remains an important policy consideration within China’s fiscal framework. Local governments rely heavily on bond issuance and land-related revenues to finance infrastructure projects and public investment.

The 2026 budget resolution approved updated debt limits for local governments, including ceilings for both general government debt and special purpose bonds. According to the budget proposal, the local government general debt limit will increase to approximately RMB 188.7 trillion, while the special bond limit will reach approximately RMB 443.2 trillion.

At the same time, fiscal authorities emphasized the need to strengthen fiscal discipline and risk management. Policy discussions during the NPC review highlighted the importance of gradually reducing structural debt risks while maintaining the role of fiscal policy in supporting economic growth.

Fiscal Policy and Economic Development Strategy

Beyond the numerical targets, the 2026 budget also reflects China’s broader economic development strategy. The NPC Financial and Economic Affairs Committee emphasized that fiscal policy should support the development of new productive forces, strengthen domestic demand, and contribute to building a modern industrial system.

In particular, fiscal resources are expected to support innovation-driven development, industrial upgrading, and the expansion of the domestic consumer market. Fiscal policy will also play a role in advancing structural reforms and maintaining financial stability.

The committee further emphasized the need for fiscal policy to coordinate with broader macroeconomic tools, including monetary policy and industrial policy, to enhance overall economic governance.

Improving Fiscal Management and Budget Discipline

Another key theme emerging from the budget resolution is the importance of improving fiscal governance. Policymakers have emphasized strengthening the management of public finances and ensuring that fiscal resources are used efficiently.

Measures discussed during the NPC review include optimizing the structure of fiscal spending, improving transparency in public finance management, and reinforcing compliance with budgetary regulations.

Authorities also highlighted the importance of deepening fiscal and taxation reform, which remains a long-term objective in China’s economic policy agenda.

Fiscal Policy in the Context of China’s Economic Transition

The 2026 budget resolution must also be understood in the context of China’s broader economic transition. The Chinese economy is currently navigating structural adjustments related to demographic change, industrial transformation, and evolving global economic conditions.

In this environment, fiscal policy is expected to play a stabilizing role by supporting investment, strengthening social programs, and facilitating structural reform.

China’s fiscal approach therefore combines targeted stimulus measures with longer-term structural policy objectives aimed at sustaining economic growth while improving the quality and resilience of the economy.

What This Means for Business

For companies operating in China or engaging with Chinese markets, the 2026 national budget provides several important policy signals.

• The expansionary fiscal stance suggests continued government support for economic stability. Infrastructure investment, industrial upgrading, and regional development projects are likely to remain important drivers of economic activity.
• The emphasis on innovation and modern industrial development indicates that fiscal resources will continue to support technological development, advanced manufacturing, and strategic industries.
• The ongoing focus on domestic demand expansion may create opportunities for businesses serving China’s consumer market, particularly in sectors linked to services, digital platforms, and consumer goods.
• Businesses should monitor developments related to local government financing and infrastructure investment, as these remain closely tied to fiscal policy and regional economic development.
• The focus on fiscal discipline and financial risk management highlights the government’s intention to balance economic stimulus with long-term fiscal sustainability.

Sources

• Resolution of the Fourth Session of the 14th National People’s Congress on the Implementation of the 2025 Central and Local Budgets and the 2026 Central and Local Budgets https://www.gov.cn
• NPC Financial and Economic Affairs Committee – Review of the 2025 Budget Execution and 2026 Budget Proposal
  https://cz.wuxi.gov.cn/doc/2026/03/09/4742463.shtml
• People’s Daily – Review Report on the 2025 Budget Execution and 2026 Budget Proposal
  https://cpc.people.com.cn/n1/2026/0311/c64387-40679484.html
• National People’s Congress – Decision to Convene the Fourth Session of the 14th NPC
  https://www.npc.gov.cn/npc/c2/kgfb/202512/t20251227_450756.html