Revenue Insights - In January-February 2026, the national general public budget revenue reached 44,154 billion yuan, with a year-on-year growth of 0.7%[3] - Tax revenue showed significant structural differentiation, with VAT growing at 4.7%, while consumption tax, corporate income tax, and personal income tax experienced negative growth of -6.2%, -3.9%, and -6.9% respectively[4] - Non-tax revenue amounted to 7,761 billion yuan, reflecting a year-on-year increase of 3.4%[3] Expenditure Trends - National general public budget expenditure in January-February 2026 was 46,706 billion yuan, showing a year-on-year growth of 3.6%[5] - Expenditure on social security and employment reached 9,279 billion yuan, growing by 8.6%, while health spending surged by 17.3% to 4,119 billion yuan[6] - The expenditure accounted for 15.6% of the total budget for 2026, indicating a typical pre-expenditure characteristic[6] Fiscal Policy Overview - The broad fiscal deficit rate for 2026 is projected at approximately 8.1%, a decrease from 2025, indicating a slight slowdown in fiscal spending relative to GDP[2] - The broad fiscal budget revenue completion rate was 17.8%, with a year-on-year decline of 1.4%, while the expenditure completion rate was 14.3%, reflecting a year-on-year increase of 6.1%[2] - The government aims to enhance the efficiency of fund utilization and promote policy coordination among various departments[9] Government Fund Budget - Government fund budget revenue in January-February 2026 was 5,363 billion yuan, down 16% year-on-year, primarily due to weak real estate market conditions[7] - Government fund budget expenditure rose to 13,174 billion yuan, marking a year-on-year increase of 16%[7]

1. Report Industry Investment Rating - The report does not explicitly provide an investment rating for the industry. 2. Core Viewpoints of the Report - In 2026, the budget - internal fiscal support for stable growth is expected to reach the second - highest level in the past six years. After deducting risk - prevention expenditures, the budget - internal fiscal expenditure growth rate in 2026 is 2.1%, and the budget - internal generalized deficit rate is 7.7%, both being the second - highest in the past six years. [2][4][6] - Considering urban investment financing, etc., the budget - internal and external fiscal support for stable growth in 2026 is also expected to reach the second - highest level in the past six years. The new urban investment financing scale is expected to rise, and the budget - external generalized deficit scale may reach 10 trillion yuan, the highest in the past six years. The budget - internal and external generalized deficit rate after deducting risk - prevention deficit rate may be 14.5%, second only to 2022 in the past six years. [2][9][13] - Fiscal policy in 2026 is expected to be more front - loaded than in 2025, which may lead to earlier government bond issuance. However, the possibility of fiscal intensification in the second half of 2026 is lower than that in 2025. [2][15][16] 3. Summaries According to Related Catalogs 3.1 2026 Budget - Internal Fiscal Support for Stable Growth - **Exclusion of Risk - Prevention Factors**: Government bonds for risk - prevention, including special treasury bonds for bank capital injection, new special bonds for land reserve and purchasing existing housing, and debt - repayment local bonds, will reduce the support for economic growth. In 2026, the scale of risk - prevention government bonds is 4165.5 billion yuan, second only to 2025 in the past six years. [3] - **Budget - Internal Fiscal Expenditure Growth Rate**: After deducting risk - prevention expenditures, the budget - internal fiscal expenditure growth rate in 2026 is expected to be 2.1%, which is the second - highest in the past six years. [4] - **Budget - Internal Generalized Deficit Rate**: The budget - internal generalized deficit rate in 2026 is expected to rise to 9.0%. After deducting risk - prevention factors, it is 7.7%, second only to 2022 in the past six years. [6] 3.2 Considering Urban Investment, etc., 2026 Budget - Internal and External Fiscal Support for Stable Growth - **Expected Increase in New Urban Investment Financing Scale**: New policy - based financial instruments and the delisting of urban investment platforms are conducive to increasing the new urban investment financing scale. In 2026, the new urban investment financing scale is expected to continue to rise. [9] - **Budget - External Generalized Deficit Scale and Rate**: The budget - external generalized deficit scale in 2026 may reach 10 trillion yuan, the highest in the past six years, and the budget - external generalized deficit rate may rise to 6.8%, second only to 2021 in the past six years. [10] - **Budget - Internal and External Generalized Deficit Rate after Deducting Risk - Prevention Deficit Rate**: After deducting risk - prevention deficit rate, the budget - internal and external generalized deficit rate in 2026 may be 14.5%, second only to 2022 in the past six years. [13] 3.3 2026 Fiscal Front - Loading and Possibility of Fiscal Intensification in the Second Half of the Year - **Fiscal Front - Loading**: In 2026, fiscal policy is expected to be more front - loaded than in 2025, which may lead to earlier government bond issuance. This is reflected in policy statements, the earlier launch of new policy - based financial instruments, and the earlier start of local bond issuance. [15][16] - **Possibility of Fiscal Intensification in the Second Half of the Year**: The possibility of fiscal intensification in the second half of 2026 is lower than that in 2025 because the Minister of Finance did not mention "reserve tools" during the Two Sessions in 2026. [2][16]

Summary of Key Points from the Conference Call Industry Overview - The discussion revolves around the Chinese fiscal system, which consists of four main accounts: General Public Budget (60% share), Government Funds (20% share), State Capital Operating Income, and Social Security Fund. [1][3] Core Insights and Arguments - The General Public Budget is primarily tax-based, with VAT, consumption tax, corporate income tax, and personal income tax contributing approximately 70% of total tax revenue. The reliance on indirect taxes has historically supported production development but may require reform in the current economic context. [1][4][5] - Government Funds mainly derive from land transfer income, which is utilized for real estate and infrastructure spending. [1][9][10] - The Social Security Fund faces a funding gap, relying on fiscal subsidies to cover deficits, which may widen due to an aging population, increasing fiscal pressure. [1][13] - The broad deficit rate in China is nearing historical highs, similar to Japan's situation over the past 30 years, indicating that rapid reductions in the deficit are unlikely without structural economic adjustments and inflation recovery. [1][16][18] - The fiscal policy's effectiveness has gained prominence due to the diminishing impact of monetary policy, particularly in light of changes in the real estate market and household leverage. [2] Important but Overlooked Content - The first account's expenditures are primarily directed towards social security, employment, education, and healthcare, with infrastructure spending decreasing. The deficit remains a concern, with revenues around 21 to 22 trillion yuan and expenditures approximately 27 trillion yuan. [8] - The second account, Government Funds, is heavily reliant on land sales, which constitute about 80% of its income, indicating a significant dependency on real estate for local government financing. [9][10] - The third account, State Capital Operating Income, has seen an increase in profit remittance from state-owned enterprises, with the remittance ratio reaching 50% in 2023. [11] - The fourth account, which includes social insurance, reported a deficit of about 2 trillion yuan in 2023, highlighting the challenges posed by demographic changes. [12][13] - The overall leverage ratio in China is relatively low compared to the US and Japan, suggesting potential for increased leverage, but structural reforms are necessary to ensure effective fund utilization and mitigate future deleveraging pressures. [19] Future Outlook - The fiscal policy is expected to have a significant impact on macroeconomic data in the first half of 2025, with a projected issuance of 14 trillion yuan in government bonds, an increase of 4 trillion yuan year-on-year. However, a reduction in issuance is anticipated in the second half, which may lead to a decline in related economic indicators. [21] - The third quarter will focus on the implementation of policy financial tools, with an expected scale of 300 to 500 billion yuan, and the fourth quarter may see new fiscal measures to stabilize market expectations and improve the economic fundamentals. [21]

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].

Core Viewpoint - The 2025 fiscal budget reflects low revenue growth targets due to domestic and international pressures, while maintaining high expenditure levels to enhance counter-cyclical fiscal adjustments [1][5]. Fiscal Revenue and Expenditure Targets - For the first budget, the 2025 general public budget revenue and expenditure growth targets are set at 0.1% and 4.4% respectively, indicating ongoing fiscal challenges [2]. - The share of spending on livelihood and technology in the general public budget has increased, with livelihood spending accounting for 37.1% and technology spending reaching a historical high of 4.2% [2]. - For the second budget, the growth target for government fund revenue is 0.7%, while expenditure growth is set to increase to 23.1%, indicating a proactive fiscal stance [2]. Fiscal Deficit Analysis - The estimated broad fiscal deficit for 2025 is approximately 11.4 trillion, corresponding to a broad deficit rate of about 8.0%, marking the highest level historically [3]. - The implied nominal GDP for 2025 is calculated to be 141.5 trillion, with a nominal GDP growth rate of approximately 4.9% [3]. Recent Fiscal Revenue and Expenditure Situation - In January-February, general public budget revenue declined, primarily due to negative growth in tax revenue, influenced by the early timing of the Spring Festival [4]. - General public budget expenditure grew by 3.4%, with a notable acceleration in government debt issuance, indicating a proactive fiscal approach [4]. - Expenditures in technology (10.6%), education (7.7%), and social security and employment (6.7%) have shown significant growth, reflecting strong support for livelihood and technological innovation [4].

【笔记20241224— 3万亿的特别国 债 （-路透称"明年特别国债规模3万亿"-股市上涨+资金面均衡偏松=中上)】 资金面均衡偏松，长债收益率明显上行。 近期30Y-10Y国债利差持续走阔，可能的原因：一是随着30Y绝对水平不断降低，保险配置动力明显减弱；二是央妈反复喊话后，省联社可能加强了对农 商行投资超长债的指导；三是924之后权益类资金对冲需求大幅下降。 今日小作文乱飞，内容真正超预期的并不多，但市场反应较大，可能是在"预期你的预期"： 1、明天是MLF续作日，如果降准了，可能会有止盈，那么我抢先一步止盈？ 2、下周就跨年了，基金年末冲量后年初可能有赎回，叠加年初银行可能止盈兑现浮盈，那么我抢先一步止盈？ -------------------------- 央行今日公开市场开展641亿元7天期逆回购操作，操作利率为1.50%。今日3554亿元逆回购到期。净回笼2913亿元。 上午资金面宽松，午后略有收敛，尾盘再度转松。 | | | | 银行间资金 | (2024. 12. 24) | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | ...