Group 1: Fiscal Revenue Trends - In the first seven months of 2025, the total revenue growth rate for the fiscal accounts was 0%, improving from -0.6% in the previous period[2] - The total expenditure growth rate was 9.3%, up from 8.9%, marking the highest level since September 2022[2] - Tax revenue showed a recovery with a monthly growth rate of 5%, compared to 1% in the previous month, while non-tax revenue fell to 2% from 3.7%[5] Group 2: Key Revenue Components - Stamp duty revenue increased significantly by 20.7%, with securities transaction stamp duty surging by 62.5%[15] - The number of new A-share accounts opened in July reached 1.9636 million, a 71% increase year-on-year[15] - Land transfer revenue in July was 267.9 billion yuan, down from 299 billion yuan, with a cumulative growth rate of -4.6%[18] Group 3: Expenditure Insights - The cumulative expenditure growth rate for the first seven months was 3.4%, with a monthly growth rate of 3%[21] - Special bond issuance accelerated, with a cumulative expenditure growth rate of 31.7% for the second fiscal account, reaching 42.4% in July[22] - The total issuance of special local government bonds was 2.78 trillion yuan, with a progress rate of 63.1%[22] Group 4: Risks and Future Outlook - Risks include potential underperformance in domestic economic recovery, policy implementation, and a significant downturn in the real estate market[26] - The sustainability of revenue growth is uncertain, particularly if budgetary income weakens alongside declining land revenue, which may lead to increased national debt issuance in Q4 2023[1]

Core Insights - The Ministry of Finance reported that from January to July, the national general public budget revenue reached 13.58 trillion yuan, a year-on-year increase of 0.1%, marking the first positive growth in revenue for the year [1] - Tax revenue totaled 11.09 trillion yuan, a slight decline of 0.3% year-on-year, while non-tax revenue increased by 2% to 2.49 trillion yuan [1] - The recovery in fiscal revenue growth in July was attributed to improved corporate profit expectations and the wealth effect from the rising Shanghai Composite Index [1] Tax Revenue Breakdown - Domestic value-added tax revenue was approximately 4.26 trillion yuan, up 3% year-on-year, indicating stable growth in industrial and service sectors [2] - Corporate income tax revenue was about 3.06 trillion yuan, down 0.4%, reflecting pressure on corporate profits [2] - Import goods value-added tax and consumption tax totaled 1.03 trillion yuan, down 6.1%, consistent with weak import trends [2] - Personal income tax revenue reached 927.9 billion yuan, up 8.8%, supported by stable growth in resident income and improved tax administration [2] - Securities transaction stamp duty revenue was 936 billion yuan, up 62.5%, indicating active capital market trading [2] Monthly Trends - From April onwards, monthly tax revenue has shown continuous positive growth for four consecutive months, with July seeing a significant increase of 5% [2][4] - The cumulative decline in tax revenue narrowed significantly, with a reduction of 0.3% for the first seven months compared to a 1.2% decline in the first half of the year [4] Sector Performance - Key sectors such as equipment manufacturing and modern services showed strong tax revenue performance, with notable increases in specific industries like railway and aerospace equipment [5] - The overall tax revenue performance is expected to improve in the second half of the year, driven by stable economic conditions and active capital markets [6] Government Expenditure - From January to July, national general public budget expenditure reached 16.07 trillion yuan, a year-on-year increase of 3.4%, with significant growth in social security, education, and health expenditures [9] - The issuance of government bonds has accelerated, contributing to a stronger fiscal expenditure environment [9] - The broad fiscal expenditure, combining general public budget and government fund expenditures, grew by 8.9% year-on-year, marking a strong performance [10]

Revenue Performance - In June 2025, the national general public budget revenue decreased by 0.3% year-on-year, a decline from May's 0.1%[1] - Tax revenue increased by 1.0% year-on-year, up from 0.6% in May, while non-tax revenue fell by 3.7%, a larger decline than the previous month's 2.2%[5] - For the first half of 2025, general public budget revenue cumulatively decreased by 0.3%, matching the performance from January to May[7] Expenditure Trends - In June 2025, general public budget expenditure grew by 0.4% year-on-year, down from 2.6% in May[1] - Cumulatively, general public budget expenditure increased by 3.4% in the first half of 2025, a slowdown from 4.2% in the previous period[9] - By June, general public budget expenditure completed 47.6% of the annual budget, slightly below the five-year average of 48.1%[9] Government Fund Insights - In June, government fund revenue surged by 20.8% year-on-year, a significant recovery from the previous month's decline of 8.1%[10] - Cumulatively, government fund revenue decreased by 2.4% in the first half of 2025, with land transfer revenue down by 6.5%[10] - Government fund expenditure in June increased by 79.2% year-on-year, driven by accelerated issuance of special bonds[10] Future Fiscal Policy Outlook - The Central Political Bureau meeting indicated that macro policies will continue to be proactive in the second half of 2025, emphasizing the need for increased government bond issuance and improved fund utilization[12] - Potential measures may include raising the fiscal deficit ratio and increasing the issuance of special bonds to stimulate domestic demand and counteract external economic slowdowns[12]

Revenue Analysis - In the first half of 2025, the national general public budget revenue was 1,155.66 billion yuan, a year-on-year decrease of 0.3%[2] - The national general public budget expenditure was 1,412.71 billion yuan, showing a year-on-year increase of 3.4%[2] - Government fund budget revenue was 194.42 billion yuan, down 2.4% year-on-year[2] Expenditure Insights - Government fund budget expenditure reached 462.73 billion yuan, marking a significant year-on-year increase of 30%[2] - Public finance expenditure growth slowed to 3.4%, with a notable focus on social welfare and technology sectors[3] - Social security and employment expenditures grew by 9.2%, indicating strong support for public welfare[3] Structural Changes - The expenditure structure emphasized "people's livelihood" and "technology," while infrastructure spending continued to decline, with a negative growth rate of 4.5%[3] - The overall broad fiscal expenditure (public finance expenditure + government fund expenditure) increased by 8.9% year-on-year[4] Performance Metrics - The completion rate of the national general public budget revenue for the first half of 2025 was 52.6%, lower than the average of the past five years (53.9%) [3] - The completion rate of public finance expenditure was 47.6%, also below the five-year average of 48.1%[3] Risk Factors - Economic environment changes could significantly impact tax revenue bases[5] - Unexpected policy changes may alter the scale and pace of fiscal expenditures[5]

Revenue Performance - In June, the national general public budget revenue was CNY 18,943 billion, a year-on-year decline of 0.3%[2] - Tax revenue showed marginal improvement, growing by 1% year-on-year, while non-tax revenue decreased by 3.7%[2] - Corporate income tax and consumption tax saw marginal increases, with corporate income tax benefiting from a low base effect[2] Expenditure Trends - Public fiscal expenditure in June was CNY 28,318 billion, growing by only 0.4% year-on-year, down from 2.6% in the previous month[3] - Cumulative expenditure growth for the first half of the year was 3.4%, below the annual target of 4%[3] - Expenditure on science and technology increased by 18%, while infrastructure spending continued to decline, with transportation spending down by 13%[3] Government Fund Dynamics - Government fund revenue in June was CNY 3,959 billion, a year-on-year increase of 20.8%, marking a significant recovery[4] - Land sales revenue rose by 22% year-on-year, contributing to the improved government fund revenue[4] - Government fund expenditure surged by 79% year-on-year in June, driven by accelerated issuance of special bonds[5] Fiscal Deficit Insights - The broad fiscal deficit has widened, but the gap between actual revenue and budgeted revenue has narrowed effectively[6] - The potential fiscal gap for the year is estimated to be no more than CNY 3,000 billion if current revenue growth is maintained[6] - There is a risk of further widening fiscal gaps if revenue growth does not sustain the levels seen in the first half of the year[7]

Core Viewpoint - China's proactive fiscal policy is aimed at promoting stable economic operation, with a significant increase in fiscal spending despite a slight decline in fiscal revenue [1][3]. Fiscal Revenue and Expenditure Overview - In 2025, the broad fiscal revenue is projected to be 11.2 trillion yuan, a year-on-year decrease of approximately 1.3%, while broad fiscal expenditure is expected to reach 14.5 trillion yuan, an increase of about 6.6% [1]. - The fiscal deficit is expected to be 3.3 trillion yuan, a year-on-year increase of 46.5%, which will be compensated through government borrowing [1][11]. Tax Revenue Analysis - The general public budget revenue for the first five months of the year is 9.7 trillion yuan, showing a slight decline of 0.3% year-on-year, with tax revenue at 7.9 trillion yuan, down 1.6% [3][4]. - The decline in tax revenue is attributed to multiple factors, including difficulties faced by some enterprises and a sluggish real estate market [4][6]. Non-Tax Revenue Trends - Non-tax revenue for the general public budget increased by 6.2% year-on-year to 1.7 trillion yuan, although it showed a decline in May compared to the same period last year [4][6]. Government Bond Issuance - To maintain fiscal spending, the government has accelerated the issuance of government bonds, with 6.29 trillion yuan issued in the first five months, a year-on-year increase of 38.5% [7][8]. Fiscal Spending Focus - Fiscal spending in the first five months reached 11.3 trillion yuan, a year-on-year increase of 4.2%, with significant allocations towards social security, employment, and education [8][10]. - The central government has expedited transfer payments to local governments to support basic livelihood guarantees [8]. Future Fiscal Policy Directions - The government plans to implement additional fiscal policies as needed, particularly in the second half of the year, to meet economic development goals [11][12]. - There is an emphasis on establishing a childcare subsidy system and addressing investment shortfalls through new policy financial tools [12].

Revenue Insights - National general public budget revenue for January to May 2025 was CNY 96,623 billion, a year-on-year decrease of 0.3%[2] - Tax revenue for the same period was CNY 79,156 billion, down 1.6% year-on-year, while non-tax revenue increased by 6.2% to CNY 17,467 billion[2] - In May, general public budget revenue showed a slight increase of 0.1% year-on-year, down from 1.9% in the previous month[3] Expenditure Trends - General public budget expenditure reached CNY 112,953 billion from January to May 2025, reflecting a year-on-year growth of 4.2%[2] - In May, general public expenditure growth slowed to 2.6%, down from 5.8% in the previous month[13] - Infrastructure-related expenditure saw a significant decline, with a year-on-year decrease of 7.7% in May, compared to a previous increase of 2.2%[14] Fiscal Policy Analysis - The fiscal policy strength index fell for the first time in 2025, indicating a simultaneous weakening of revenue and expenditure[4] - The broad expenditure growth rate was 4% in May, a sharp decline from 12.9% previously, while broad revenue growth was -1.2%, down from 2.7%[25] - Government fund budget revenue turned negative in May, with a year-on-year decrease of 8.1%, primarily due to a 14.6% drop in land transfer income[20]

Group 1 - The core viewpoint is that recent economic indicators for April demonstrate the resilience of China's economy, with some data exceeding market expectations, particularly an 8.1% year-on-year increase in goods exports in USD terms [1] - Despite a decline in exports and imports with the US by 21% and 13% respectively, exports to non-US regions have significantly increased, indicating a need to reassess the impact of tariffs on the economy in May and June [1] - The expectation for further policy easing may need to be re-evaluated based on the stable growth in production and demand, contrary to previous market expectations of economic pressure [1] Group 2 - The next phase will see more proactive fiscal policies and moderately loose monetary policies, with a focus on stabilizing the domestic economic cycle, particularly through the real estate market [2] - From January to April, general public budget expenditure increased by 4.6%, while government fund budget expenditure rose by 17.7%, indicating a broad fiscal expenditure growth of over 7% [2] - The adjustment of micro-policies is crucial, as current low price phenomena are influenced not only by supply relations but also by the micro-market environment and pricing systems [2] Group 3 - The expansion of domestic demand strategy should focus on structural adjustments rather than just short-term stimulus, requiring a shift in understanding macro policies from crisis management to mid-term structural adjustments [3] - A better understanding of the relationship between policy choices, coordination of macro and micro policies, and the balance between short-term policies and mid-term reforms is essential for enhancing economic resilience [3]

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report - In April, the broad fiscal revenue turned slightly positive, and the intensity of fiscal expenditure continued to increase. Looking ahead, both domestic and external demands are under pressure due to the fluctuating tariff policies, so incremental fiscal policies are still worth expecting [1][4]. Summary by Relevant Catalogs Revenue Side - In April, the year - to - date tax revenue growth rate turned positive for the first time, the non - tax revenue growth rate declined, and the general budget revenue growth rate slightly increased. From January to April, the central general public budget revenue decreased by 3.8% year - on - year, while the local general public budget revenue increased by 2.2% year - on - year [1][10]. - In terms of taxes, personal income tax and enterprise income tax had relatively high growth rates. New - quality productivity supported tax growth. The government - funded revenue growth rate turned positive for the first time in nearly a year, which may be related to the improvement in land transactions at the beginning of the year and the lag in land transfer revenues, but its sustainability remains to be seen [2][12]. Expenditure Side - In April, the expenditure of the general public budget maintained a relatively high growth rate, and the expenditure growth rate of government - funded funds further increased, indicating that fiscal expenditure was front - loaded. Structurally, the expenditure on social sciences, culture, and education increased significantly [3][16]. - Measured by the broad deficit, fiscal efforts were intensified and were earlier than in previous years. As of April, the cumulative broad fiscal deficit was 2.65 trillion yuan, and the current cumulative broad deficit rate was 1.9%, higher than the same period from 2021 - 2024 and similar to that in 2020 [4][22].

Report Industry Investment Rating No relevant content provided. Core View of the Report In March, the growth of general fiscal revenue remained weak, while fiscal expenditure increased significantly. In the context of tariff policy shocks and limited urban investment financing, it is expected that fiscal policy will further strengthen in the future, including accelerating the issuance of government bonds within the budget and potentially expanding fiscal deficits, special bonds, and special treasury bonds [1][5]. Summary by Related Catalogs Revenue Side - **General Public Budget Revenue**: In March 2025, the monthly general public budget revenue increased by 0.3% year-on-year (previous value -1.6%), with tax revenue down 2.2% year-on-year (previous value -3.9%) and non-tax revenue up 5.9% year-on-year (previous value 11.0%). Central general public budget revenue decreased by 5.3% year-on-year, while local general public budget revenue increased by 2.79% [1][11]. - **Tax Revenue**: In March, tax revenue was down 2.2% year-on-year. Among the four major taxes, domestic VAT increased by 4.9% year-on-year (1 - 2 months 1.1% year-on-year), domestic consumption tax increased by 9.6% year-on-year (1 - 2 months 0.3% year-on-year), corporate income tax increased by 16.0% year-on-year (1 - 2 months -10.4% year-on-year), and personal income tax dropped by 58.5% year-on-year. Export tax rebates increased by 8.3% year-on-year, tariffs decreased by 12.1% year-on-year, real estate-related taxes decreased by 0.1% year-on-year, and securities trading stamp duty increased by 63.2% year-on-year [2][13]. - **Government Fund Revenue**: In March, government fund revenue decreased by 11.7% year-on-year (1 - 2 months -10.7% year-on-year), mainly due to weak land transfer revenue. From January to March, government fund revenue decreased by 11% year-on-year. Although high-frequency land transaction data improved at the beginning of the year, the sustainability is expected to be limited [3][15]. Expenditure Side - **General Public Budget Expenditure and Government Fund Expenditure**: In March, general public budget expenditure increased by 5.7% year-on-year (1 - 2 months 3.4% year-on-year), and government fund expenditure increased by 27.9% year-on-year (1 - 2 months 1.2% year-on-year). From January to March, general public budget expenditure increased by 4.2% year-on-year, and government fund expenditure increased by 11.1% year-on-year [3][17]. - **Fiscal Expenditure Structure**: In March, the growth rate of traditional infrastructure expenditure was low, and the increase was mainly concentrated in social and cultural education and debt interest payments. Infrastructure fiscal expenditure increased by 0.49% year-on-year, with significant differences among sub - items. Expenditure on education, social security and employment, and debt interest payments had relatively high growth rates [4][17]. Fiscal Deficit As of March, the cumulative general fiscal deficit was 2.3 trillion yuan. Assuming a nominal GDP growth rate of 4% this year, the current cumulative general fiscal deficit rate is 1.6%, higher than in previous years and close to 2020, indicating increased fiscal efforts [4][25]. Future Outlook In the context of tariff policy shocks and limited urban investment financing, it is expected that fiscal policy will further strengthen. This includes accelerating the issuance of special treasury bonds and special bonds, and there is still room for further expansion of fiscal deficits, special bonds, and special treasury bonds. The subsequent Politburo meeting is an important observation window [5][30].