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].

Core Conclusion - The article discusses the discrepancies in market expectations regarding this year's fiscal budget, particularly in terms of the scale of spending and deficit levels, highlighting that actual fiscal strength may be closer to economic growth rather than the initially projected figures [2][4]. Group 1: Fiscal Spending Growth - The projected growth of broad fiscal spending is estimated at 3.6 trillion, with a growth rate of 9.3%. However, this calculation may overestimate actual spending due to technical details, suggesting a more realistic growth of approximately 1.6 trillion, with a growth rate around 4% [2][4][5]. - Historical data indicates that the method of summing the two accounts often leads to an overestimation of broad fiscal spending by 1-2 trillion and an overestimation of growth rates by 3-10% [5][4]. Group 2: Government Debt and Deficit Rate - The new government debt is projected to increase by 2.9 trillion, which could imply a broad deficit rate increase of 2 percentage points. However, the actual increase in the deficit rate is likely to be around 1 percentage point, still reaching a historical high [8][9]. - The calculation of the broad deficit rate should consider this year's GDP rather than last year's, leading to a revised estimate of the deficit rate at approximately 8.7% [8][9]. Group 3: Evaluation of Fiscal Spending Effectiveness - The effectiveness of fiscal spending may depend more on the fiscal multiplier rather than just the capital contribution. The capital contribution for this year appears limited, with a focus on expanding special bonds for investment [14][15]. - The government is expected to adopt measures to enhance the investment multiplier, such as optimizing the management of special bonds and supporting new investment areas [15][18]. - There is a notable shift towards increasing the consumption multiplier, with a higher proportion of new bonds allocated for consumption-related projects compared to previous years [17][18].

Revenue Insights - In the first two months of 2025, national public budget revenue was 43,856 billion yuan, a year-on-year decline of 1.6%[3] - Tax revenue decreased by 3.9% year-on-year, while non-tax revenue growth slowed significantly from 94% in December to 11%[3] - Individual income tax saw a substantial increase of 27% year-on-year, influenced by a low base effect from 2024[3] Expenditure Analysis - Public fiscal expenditure reached 45,096 billion yuan in January-February 2025, growing by 3.4% year-on-year, significantly outpacing revenue growth[4] - Expenditure in the first two months accounted for approximately 15.2% of the annual target, slightly lower than 2024 but higher than the average of the past three years[4] - Social welfare and technology expenditures grew at a faster pace, with education and social security spending increasing by 8% and 7% respectively[4] Fiscal Policy Outlook - The annual budget draft anticipates a 3.7% growth in tax revenue for 2025, although the first two months did not meet this target[4] - The government aims to reduce reliance on non-tax revenue, indicating a shift in fiscal strategy[4] - Special bond issuance has accelerated, with 9,148 billion yuan issued by March 24, 2025, representing about 20% of the annual target[5] Market Implications - The decline in land transfer revenue, down 16% year-on-year, suggests ongoing challenges in the real estate market despite previous improvements[5] - The focus of fiscal spending is shifting towards "benefiting people's livelihoods and promoting consumption," indicating a strategic pivot in government priorities[5] - Risks include potential economic downturns and the possibility of policy execution falling short of expectations[5]

Revenue Performance - National general public budget revenue for January-February 2025 was 43,856 billion yuan, down 1.6% year-on-year, compared to a 1.3% increase last year[2] - Tax revenue decreased by 3.9% year-on-year, while non-tax revenue increased by 11%[2] - The completion rate of revenue for January-February 2025 was 19.9%, consistent with last year but lagging behind 2021-2023[5] Expenditure Analysis - General public budget expenditure for January-February 2025 was 45,096 billion yuan, up 3.4% year-on-year, a decline from 9.5% in December 2024[3][15] - Infrastructure-related expenditure saw a significant decline of 5.6% year-on-year, while social welfare expenditure grew by 5.4%[3][14] - Debt interest payments increased by 19.7% year-on-year, indicating rising financial obligations[3] Government Fund Budget - Government fund revenue decreased by 10.7% year-on-year, slightly improving from a 12.2% decline last year[4][18] - Land transfer income fell by 15.7%, reflecting a continued downward trend[4][18] - Government fund expenditure grew by only 1.2%, significantly down from 12.6% in December 2024[4][18] Fiscal Policy Insights - The fiscal policy intensity index continues to rise, with broad expenditure growth at 2.9% and broad revenue growth at -2.9%[4][22] - The fiscal policy intensity index showed fluctuations in 2024, with a rebound after the introduction of growth-stabilizing policies in September[4][22]