Group 1: Fiscal Overview - The fiscal operation for 2026 has started smoothly, with a 0.7% year-on-year growth in general public budget revenue during January-February, indicating overall stability [1] - Tax revenue remained flat compared to the same period last year, while non-tax revenue saw a significant increase, reflecting a recovery in certain sectors [1] - The government is expected to maintain an active fiscal policy, focusing on optimizing expenditure structure and ensuring funding for key projects [3] Group 2: Revenue Analysis - Non-tax revenue showed a high growth rate, particularly in sectors related to capital markets, with notable increases in securities transaction stamp duty and vehicle purchase tax [1] - Import and export-related tax revenues increased significantly, indicating resilient external demand, while domestic consumption tax and income tax both experienced negative growth, suggesting a fragile recovery in consumption [1] - Real estate-related tax revenues remained low, highlighting the need for further policy support to restore market confidence and transaction activity [1] Group 3: Expenditure Insights - General public budget expenditure grew by 3.6% year-on-year in January-February, outpacing revenue growth and reflecting a policy direction focused on enhancing efficiency [2] - Social security, employment, and health expenditures led the growth, reinforcing the social safety net [2] - Expenditures in science and technology decreased by 8%, likely due to project implementation timing and budget allocation factors [2] Group 4: Government Fund Dynamics - Government fund budget revenue fell by 16% year-on-year, with land use rights transfer income declining by 25.2%, indicating low willingness among real estate companies to acquire land [2] - Conversely, government fund budget expenditure increased by 16%, driven by accelerated issuance and utilization of new local government special bonds, supporting infrastructure investment [2]

Group 1 - The overall fiscal revenue growth rate for January-February 2026 decreased to -1.4%, but tax revenue showed improvement due to price recovery, while non-tax revenue remained strong, providing support to the revenue side [2] - The general fiscal expenditure for January-February 2026 increased by 6.1% year-on-year, indicating strong support from fiscal policy for economic recovery [2] - The fiscal expenditure structure is increasingly focused on people's livelihoods, with a stable revenue outlook supported by price recovery and macro policy implementation [2] Group 2 - National general public budget revenue for January-February 2026 was 4.4 trillion yuan, a year-on-year increase of 0.7%, which is below the target growth rate of 2.2% [3] - Central revenue decreased by 1.7% year-on-year, while local revenue increased by 2.6%, exceeding target growth [3] - Tax revenue growth was 0.1%, and non-tax revenue growth was 3.4%, both turning positive compared to December of the previous year [3] Group 3 - Personal income tax decreased by 7% year-on-year, influenced by the timing of the Spring Festival and year-end bonus tax payments [6] - Corporate income tax fell by 3.9% year-on-year, indicating ongoing challenges in corporate profitability [6] - Real estate-related taxes showed weakness, with property tax and land value-added tax declining, while deed tax recorded negative growth [6] Group 4 - National fiscal expenditure for January-February 2026 was 4.7 trillion yuan, with a year-on-year growth rate of 3.6%, slightly below the annual target growth rate of 4.4% [8] - The expenditure progress for January-February was 15.6%, higher than the same period last year and faster than the average progress over the past five years [8] Group 5 - In January-February 2026, the proportion of infrastructure spending decreased compared to December of the previous year, while spending in other areas, particularly social security and employment, saw significant increases [9] - Government fund income growth was -16%, falling short of the budget target, while government fund expenditure growth was 16%, exceeding the target growth rate [12] - The government fund expenditure progress reached 11.1%, marking the highest level for the same period since 2020 [12]

Revenue Insights - In January-February 2026, the general public budget revenue reached 4.4 trillion yuan, with a year-on-year growth of 0.7%, below the target growth rate of 2.2%[3] - Central revenue decreased by 1.7% year-on-year, while local revenue increased by 2.6%, exceeding the target growth rate[3] - Tax revenue grew by 0.1% year-on-year, and non-tax revenue increased by 3.4%, both turning positive compared to December 2025[3] Expenditure Insights - In January-February 2026, total fiscal expenditure was 4.7 trillion yuan, with a year-on-year growth of 3.6%, slightly below the annual target growth rate of 4.4%[17] - Central and local expenditure growth rates were 4.5% and 3.5%, respectively, with public fiscal expenditure progress at 15.6%, higher than the previous year and the 5-year average of 14.8%[17] - Significant increases were noted in social security and employment expenditures, which rose by 16 percentage points[18] Fund Insights - Government fund revenue decreased by 16% year-on-year, significantly below the budget target of 0.6%, with land use rights revenue dropping by 25.2%[22] - Government fund expenditure grew by 16%, surpassing the target growth rate of 5.1%, primarily due to higher issuance of special bonds compared to the previous year[22] Market Outlook - Fiscal spending is expected to support economic recovery, with a focus on improving living standards and stabilizing revenue through price recovery[2] - The overall fiscal deficit rate is projected to decrease, but the effectiveness of policies may enhance demand further as PPI recovers[2] Risks - Potential risks include unexpected policy changes, slower-than-expected economic recovery, and the possibility of historical experience becoming less relevant[25][26]

Revenue Insights - In December 2025, the national general public budget revenue was CNY 21.6 trillion, a decrease of 1.7% compared to 2024[8] - December's public budget revenue saw a year-on-year decline of 25%, with non-tax revenue dropping by 47.9%[8] - Tax revenue also fell, with a year-on-year decrease of 11.5% in December, attributed to the concentrated "refund and reduction" effect at year-end[10] Expenditure Trends - National general public budget expenditure grew by 1% in 2025, with December's year-on-year decline narrowing to 1.8% from November's 3.7%[11] - The focus remains on "ensuring key guarantees" and "improving quality and efficiency" in expenditure policies[14] Government Fund Performance - Government fund budget revenue was CNY 5.77 trillion in 2025, down 7% from 2024, with December's revenue declining by 11.7% year-on-year[21] - Government fund budget expenditure increased by 11.3% in 2025, totaling CNY 11.29 trillion, driven by accelerated bond fund usage[21] Future Fiscal Policy Outlook - The fiscal policy for 2026 is set to increase overall expenditure while optimizing structure and enhancing efficiency[23] - The Ministry of Finance aims to ensure that expenditure in key areas remains strong and that low-efficiency spending is reduced[23] Risk Considerations - There is a noted risk regarding the need to boost real estate demand, which remains a concern for future economic stability[28]

Revenue Insights - In November, the national general public budget revenue was 1,402.6 billion yuan, showing a slight year-on-year decline of 0.02%[2] - Tax revenue growth slowed down, with November tax revenue recorded at 1,145.0 billion yuan, a year-on-year increase of 2.8%, down from 8.6% in the previous month[2] - Non-tax revenue in November was 257.6 billion yuan, a year-on-year decline of 10.8%, but the decline was less severe than the previous month[2] Expenditure Trends - General budget expenditure in November was 2,271.3 billion yuan, a year-on-year decrease of 3.7%, but showing a marginal improvement from a previous decline of 9.8%[3] - Social security and employment expenditure saw a significant drop, decreasing by 7% in November, marking a rare negative growth in the past three years[3] - Science and technology expenditure increased significantly by 28 percentage points to 27% in November, indicating a focus on innovation[3] Government Fund Dynamics - Government fund revenue in November was 580.1 billion yuan, a year-on-year decline of 15.8%, but the decline was less than the previous month by 2.6 percentage points[4] - Government fund expenditure surged to 1,123.2 billion yuan in November, with a year-on-year growth rate of 41 percentage points, indicating a strong recovery in spending[4] - The issuance of special bonds accelerated, contributing to the significant increase in government fund expenditure[4] Fiscal Health Outlook - The overall fiscal revenue decline is expected to be manageable, with potential revenue gaps estimated at around 340 billion yuan under certain assumptions[4] - If the government fund revenue growth continues as in November, the total revenue gap could exceed 750 billion yuan, but the impact on the economy is expected to be limited[4]

Fiscal Revenue and Expenditure - In November, public fiscal revenue was CNY 14,026.0 billion, remaining flat year-on-year, with tax revenue at CNY 11,450.0 billion, a 2.8% increase, but the growth rate slowed by 5.8 percentage points compared to October[2] - Non-tax revenue fell to CNY 2,576.0 billion, down 10.8% year-on-year, with the decline narrowing by 22.1 percentage points from the previous month[2] - Public fiscal expenditure in November was CNY 22,713.0 billion, a decrease of 3.7% year-on-year, although the decline rate improved by 6.1 percentage points from October[3] Government Fund Performance - From January to November, government fund budget revenue totaled CNY 40,274.0 billion, down 4.9% year-on-year, with a worsening decline rate of 2.1 percentage points compared to the previous month[17] - In November, central government fund revenue was CNY 320.0 billion, down 9.1%, while local government fund revenue was CNY 5,481.0 billion, down 16.1%, with the decline rate improving by 4.3 percentage points from October[5] - The revenue from state-owned land use rights fell to CNY 4,137.0 billion, a 26.8% decrease year-on-year, with the decline rate slightly narrowing by 0.4 percentage points from October[5] Fiscal Policy Outlook - The central economic work conference emphasized the continuation of a more proactive fiscal policy, aiming to maintain necessary fiscal deficits and total expenditure levels[4] - The actual deficit rate for this year has exceeded 5.0%, and fiscal spending and financing are expected to maintain necessary strength in the coming year[4] - Broad fiscal expenditure from January to November reached CNY 340,662 billion, a 4.5% increase year-on-year, with central fiscal expenditure at CNY 47,310.0 billion, growing by 21.0%[22]

Core Viewpoint - The article discusses the recovery of China's fiscal revenue in 2023, driven primarily by tax revenue growth, alongside the implementation of proactive fiscal policies to stabilize the economy and support key sectors [3][4]. Fiscal Revenue and Tax Recovery - In the first three quarters of 2023, the broad fiscal revenue reached 194,593 billion yuan, marking a year-on-year growth of approximately 0.4%, the first positive growth this year [3][4]. - The general public budget revenue was 163,876 billion yuan, with tax revenue at 132,664 billion yuan, showing a year-on-year increase of 0.5% and 0.7% respectively [6][4]. - Tax revenue growth turned positive in 2023, with September seeing an 8.7% year-on-year increase, the highest monthly growth this year [6][4]. - The recovery in tax revenue is attributed to improved corporate performance and active capital market transactions, with capital market-related tax revenue increasing by 56.8% year-on-year [6][4]. - Non-tax revenue, however, declined by 0.4% to 31,212 billion yuan, primarily due to a high base from the previous year and stricter regulation on administrative penalties [8][7]. Government Fund Revenue - Government fund revenue, mainly from land sales, decreased by 0.5% to 30,717 billion yuan, with land use rights revenue dropping by 4.2% to 22,302 billion yuan [12][4]. - The decline in land sale revenue is attributed to ongoing policies aimed at stabilizing the real estate market [12][4]. Fiscal Expenditure Trends - Fiscal expenditure in the first three quarters reached 208,064 billion yuan, a year-on-year increase of 3.1%, with significant allocations to social security, education, and healthcare [15][4]. - The government has accelerated the issuance of special bonds to support major projects, with net financing from government bonds reaching 1.146 trillion yuan, an increase of 428 billion yuan year-on-year [13][4]. - Government fund expenditure grew significantly by 23.9% to 74,924 billion yuan, reflecting a strong focus on public welfare and infrastructure [16][4]. Economic Stabilization Measures - The government has introduced new policy financial tools worth 500 billion yuan to enhance project capital and stimulate investment, with over 3.3 trillion yuan in total project investment expected [19][4]. - Recent fiscal policies aim to support local governments in managing existing debts and facilitating economic recovery, particularly in major economic provinces [19][4].

Revenue Insights - In September, general public budget revenue increased by 2.6% year-on-year, up from 2.0% in August[7] - Tax revenue saw a significant rise of 8.7% in September compared to 3.4% in August, while non-tax revenue dropped to -11.4% from -3.8%[7][9] Expenditure Trends - General public budget expenditure grew by 3.1% in September, improving from 0.8% in August[12] - Infrastructure-related expenditure showed a rebound, with energy-saving and environmental protection spending growing by 22.6% year-on-year, although down from 29.8% in August[13] Government Fund Dynamics - Government fund revenue increased by 5.6% in September, recovering from -5.7% in August, while local government fund revenue rose by 5.9% from -0.2%[18] - Government fund expenditure in September was up by 0.4%, a decrease from 19.8% in August, indicating a slower growth rate due to last year's high base[18] Fiscal Policy Outlook - The fiscal spending pace is expected to accelerate in Q4, with a focus on infrastructure projects and easing spending bottlenecks[22] - As of mid-October, new policy financial tools have been deployed exceeding 100 billion yuan, indicating a proactive fiscal stance[22]

1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core View of the Report In August 2025, fiscal revenue and expenditure performance was relatively stable. Tax revenue's cumulative year - on - year growth turned positive for the first time, possibly an early sign of improved economic vitality, but land transfer revenue still had a large drag, reflecting the inertia of the "old economy." The general budget target for this year is not difficult to achieve, while the government - funded budget may face a certain gap, but policy - based financial instruments may form a certain hedge [8]. 3. Summary by Relevant Catalogs 3.1 General Budget Revenue - **Overall Growth and Composition**: In August, the national general budget revenue increased by 2.0% year - on - year, slightly lower than July. Tax revenue increased by 3.4% (previous value 5.0%), and non - tax revenue's year - on - year decline narrowed from - 12.9% to - 3.8%. From January to August, tax revenue's cumulative year - on - year growth was 0.02%, the first positive growth this year, and non - tax revenue's cumulative year - on - year growth was 1.5% [1]. - **Total Progress and Regional Differences**: From January to August, the cumulative year - on - year growth of general budget revenue was 0.3%, 0.1% higher than the annual budget target, and about 67% of the annual budget was completed, slightly faster than the same period last year. In August, the year - on - year growth of central and local fiscal revenues was both 2.0%, with a slight decline from the previous value. Considering the convergence of economic data in recent months, there may still be some pressure on revenue growth in the future [2]. 3.2 Tax Structure - **High - growth Taxes**: In August, value - added tax, personal income tax, and corporate income tax continued to grow rapidly. Value - added tax increased by 4.4% year - on - year, personal income tax and corporate income tax increased by 9.7% and 33.4% respectively, mainly related to strengthened tax supervision, active capital markets, and improved corporate profitability [3]. - **Slowing - growth Taxes**: The year - on - year growth rate of consumption tax slowed down to 0.9% (previous value 5.4%). Low consumer enthusiasm and high - base pressure in the fourth quarter may affect consumption tax revenue [3]. - **Declining Taxes**: The decline of real - estate - related taxes widened, with a 11.6% year - on - year decrease in August. Real - estate policies had limited impact on sales, and investment and construction indicators continued to decline [4]. - **Increasing Taxes**: The year - on - year growth of stamp duty further increased, with the year - on - year growth of stamp duty rising from 24% in July to 154%, and the year - on - year growth of securities trading stamp duty rising from 125% to 226%, due to the strong rise of the stock market [4]. 3.3 General Budget Expenditure - **Overall Growth**: In August, general public budget expenditure increased by 0.8% year - on - year, slower than the previous value of 3.0%. The cumulative year - on - year growth in the first eight months was 3.1%, lower than the annual budget target of 4.4% [5]. - **Expenditure Areas**: The main driving force was still people's livelihood expenditure, such as social security and employment, health, and education. Infrastructure - related expenditure was still weak, and the growth rate of generalized and narrow - sense infrastructure investment declined [5]. 3.4 Government - Funded Revenue - **Overall Growth**: In August, government - funded revenue decreased by 5.7% year - on - year, turning negative from positive. From January to August, the cumulative year - on - year growth was - 1.4%, lower than the annual budget target of 0.7%. Land transfer revenue's cumulative year - on - year decline was 4.7% [6]. - **Completion Progress and Forecast**: By August, government - funded revenue had completed about 42% of the annual budget. Assuming the current real - estate demand trend continues, the annual revenue growth of the second - account budget is expected to be around - 5%, resulting in a revenue gap of 300 - 500 billion yuan [6]. 3.5 Government - Funded Expenditure - **Growth and Reasons**: In August, government - funded expenditure increased by 19.8% year - on - year, still maintaining high growth. The cumulative year - on - year growth in the first eight months was 30.0%, above the annual budget target of 23.1%. The high - intensity expenditure was mainly due to the front - loaded issuance of local bonds and the injection of special treasury bonds [7]. - **Combined Fiscal Deficit**: The combined broad - fiscal deficit of the two accounts in the first eight months was 6.7 trillion yuan, nearly 2 trillion yuan higher than the same period last year. After excluding the 500 - billion - yuan special treasury bond for capital injection, the broad - fiscal deficit was 6.2 trillion yuan, comparable to the same period in 2022 [7]. 3.6 Future Fiscal Concerns - **Rhythm**: In the third quarter, replacement bonds and special treasury bonds were completed successively. In the fourth quarter, government bond supply will enter a low - season, and the fiscal support for the economy will decline year - on - year, but there is still room for the expenditure of existing funds, mainly in the general budget [9]. - **Tools**: In August, core economic indicators weakened, and the market expected pro - growth policies. However, considering the small gap in the annual target, the possibility of additional fiscal deficits in the fourth quarter is low. Policy - based financial instruments are the core focus, and attention should also be paid to whether there is incremental support for implicit debt resolution [9]. - **Investment Direction**: This year, fiscal focus is not only on infrastructure, but also on child - rearing subsidies, urban renewal, consumer loan interest subsidies, and enterprise arrears. These will still be the focus of future efforts, and attention should be paid to whether there is incremental capital support [9].

Report Summary 1. Investment Rating for the Industry No industry investment rating is provided in the report. 2. Core View of the Report The fiscal data in July continued to show a warming trend. The improvement on the tax side led to a slight acceleration in narrow - fiscal spending, while broad - fiscal spending maintained resilience supported by special bonds for bank capital injection and ultra - long - term special bonds. Based on the current progress, it is estimated that the fiscal strength in the second half of the year can achieve a smooth continuation, and the probability of supplementing fiscal funds through additional bond issuance within the year is low [1][8]. 3. Summary by Relevant Sections Tax Revenue Situation - In July 2025, the national general budget revenue increased by 2.7% year - on - year, with significant tax contribution. Tax revenue increased by 5.0% year - on - year, 4 percentage points higher than the previous value, while non - tax revenue decreased by 12.9% year - on - year, with negative growth for three consecutive months and an expanding decline. The total general budget revenue from January to July increased by 0.1% year - on - year, reaching the annual budget target and completing about 62% of the annual budget, faster than the same period last year. In July, central fiscal revenue increased by 2.2% year - on - year, and local fiscal revenue increased by 3.1% year - on - year [1][2]. - In terms of tax structure, major tax items generally showed high year - on - year growth. Personal income tax and consumption tax increased by 13.9% and 5.4% respectively in July, with their cumulative year - on - year growth from January to July being 8.8% and 2.1%. Corporate income tax increased by 6.4% year - on - year in July. VAT increased by 4.3% year - on - year in July, showing a slight decline but overall remaining stable. Most real - estate - related taxes saw a decline in growth, while securities trading stamp duty increased significantly by 125.4% year - on - year in July [3][4]. General Budget Expenditure - In July, general public budget expenditure increased by 3.0% year - on - year, 2.7 percentage points higher than the previous value. The cumulative year - on - year growth from January to July was 3.4%, 1 percentage point away from the annual target. The main driving force for expenditure was on the livelihood front, such as social security and employment, health, and education, while infrastructure - related expenditure remained in the negative range, and science - related expenditure turned negative [4]. Government - Fund Revenue - In July, national government - fund revenue increased by 8.9% year - on - year, with a marginal slowdown in growth. The cumulative year - on - year decline from January to July further narrowed to 0.7%, and the annual budget target is 0.7%. The cumulative year - on - year decline in state - owned land use right transfer revenue narrowed to 4.6%. The government - fund revenue in the first half of the year completed about 37% of the annual progress, significantly faster than the same period last year [6]. Government - Fund Expenditure - In July, national government - fund expenditure increased by 42.4% year - on - year, still at a high level although it declined compared to the previous value. The cumulative year - on - year growth in the first half of the year was 31.7%, above the annual budget target of 23.1%. The budget completion progress of government - fund expenditure for the whole year was about 43%, faster than the same period in previous years. The combined broad - fiscal deficit of the two accounts in the first seven months reached 5.6 trillion, 1.8 trillion higher than the same period last year [7]. Overall Fiscal Outlook - The first - account target is expected to be achieved, while the second - account may have a small gap. Assuming the annual growth rate of the second - account revenue is around - 5%, there may be a revenue gap of about 300 - 50 billion by the end of the year. However, government - fund revenue and expenditure are not rigid requirements, and the expected 500 - billion - yuan policy - based financial instruments can basically offset the gap [8].