Core Viewpoint - The Ministry of Finance released the "2025 Mid-Year Report on China's Fiscal Policy Execution," highlighting a proactive fiscal policy aimed at stabilizing employment, businesses, markets, and expectations, while promoting economic recovery [1][3]. Fiscal Policy Execution - The fiscal operation in the first half of 2025 was stable, with good budget execution and a gradual recovery in tax revenue [3]. - The central government allocated 300 billion yuan for long-term special bonds to support consumption, alongside 7.279 billion yuan for service industry development, aimed at stimulating rural and county-level consumption [4]. Investment and Consumption - The fiscal policy coordinated efforts to boost consumption and expand investment, with 42.7% of the annual issuance of special bonds completed in the first half, which is 17.7 percentage points faster than the previous year [4]. - The Ministry of Finance has implemented measures to support effective investment, including the issuance of special bonds for infrastructure and housing projects [4]. Trade and Tariff Adjustments - The Ministry effectively utilized tariff adjustments, implementing temporary import tax rates lower than the most-favored-nation rates on 935 items since January 1, 2025, to enhance the synergy between domestic and international markets [5]. Fiscal Management Pilot Programs - The Ministry initiated fiscal management pilot programs in 12 provinces to improve fiscal resource allocation and budget management, with a focus on achieving breakthroughs in key areas over two years [7][6]. Future Fiscal Policy Directions - The report outlines six key areas for future fiscal policy, including: 1. Utilizing more proactive fiscal policies to stimulate consumption and support key sectors [10]. 2. Supporting employment stability and foreign trade through enhanced public services and training [11]. 3. Fostering new growth drivers by promoting innovation and upgrading manufacturing [11]. 4. Improving social welfare services, particularly for the elderly and children [11]. 5. Preventing and mitigating risks in key areas through debt management policies [11]. 6. Enhancing fiscal governance and reforming tax policies [11].

Core Insights - The report highlights that since 2025, fiscal policy in China has become more proactive, focusing on stabilizing employment, businesses, markets, and expectations, while enhancing coordination with other policies to promote economic recovery [1][2] Fiscal Performance - In the first half of 2025, China's fiscal operations were stable, with good budget execution and a continuous recovery in fiscal revenue, particularly in tax income [2] - Expenditure intensity increased, effectively safeguarding key areas [2] Consumption and Investment - Fiscal policy has synergized efforts to boost consumption and expand investment, enhancing domestic market vitality [3] - The central government allocated 300 billion yuan in special bonds to support consumption upgrades and provided 7.279 billion yuan for service industry development [3] - Employment support measures included tax reductions, loan guarantees, and subsidies to enhance job services and vocational training [3] - Special bonds issuance was accelerated, with 42.7% of the annual target completed in the first half, 17.7 percentage points faster than the previous year [3] Trade and Foreign Investment - The Ministry of Finance effectively utilized tariff adjustments to stabilize foreign trade and investment, implementing lower temporary import tax rates on 935 items since January 1, 2025 [4] - The expansion of high-standard free trade zones and cooperation with trade partners on tariff reductions were emphasized [4] Fiscal Management Pilot - The Ministry of Finance initiated a pilot program for scientific fiscal management in 12 provinces, aiming for breakthroughs in key fiscal management areas over two years [5] - A national platform for the sharing of state-owned assets was established, resulting in over 200 asset transfers and savings of more than 40 million yuan in budget funds [5] Future Fiscal Policy Directions - The report outlines six key areas for future fiscal policy, including the effective use of proactive fiscal measures and support for consumption, employment, and foreign trade [7][8] - Emphasis on improving living standards through services for the elderly and children, as well as enhancing education and healthcare policies [8] - Continuous efforts to mitigate risks in key areas and improve fiscal governance efficiency through various reforms [8]