Report Industry Investment Rating No information regarding the report industry investment rating is provided in the given content. Core View of the Report - In June 2025, the fiscal data continued to show a warming trend. The revenue side had highlights such as personal income tax, and land sales revenue also marginally stabilized. The expenditure side continued to reflect the characteristics of fiscal efforts. Based on the current progress, the annual general budget revenue and expenditure targets are expected to be achieved, and there may be a small gap in government - managed funds, but policy - based financial tools and local debt limit space in the second half of the year may provide some flexibility. Overall, the fiscal situation is better than last year [11]. - The broad - based fiscal deficit of the two accounts combined in the first half of the year reached 5.3 trillion, significantly higher than the same period in 2023 and 2024, and comparable to 2022. It is expected to remain active in the second half of the year. Key areas to focus on in the future include major infrastructure projects and "urban renewal" policies [11]. Summary by Relevant Catalogs 1. General Budget Revenue - **Revenue Growth and Composition**: In June 2025, the national general budget revenue decreased by 0.3% year - on - year, with non - tax revenue being a significant drag. Tax revenue increased by 1.0% year - on - year, while non - tax revenue decreased by 3.7% year - on - year and has been on a continuous downward trend this year. The decline in non - tax revenue is expected to continue, and tax revenue may be the focus of the revenue side this year [1]. - **Revenue Target Progress**: In the first half of the year, the cumulative year - on - year growth of general budget revenue was - 0.3%, 0.4 percentage points short of the annual target (0.1%), and it completed about 53% of the annual budget, slightly faster than the same period last year and basically in line with the average of the past five years [2]. - **Central and Local Revenue**: In June, central fiscal revenue decreased by 1.8% year - on - year, while local fiscal revenue increased by 0.6% year - on - year [2]. 2. Tax Structure - **Main Tax Items**: - **Value - Added Tax and Personal Income Tax**: In June, the year - on - year growth rates of value - added tax and personal income tax were 6.8% and 5.0% respectively, showing a slight decline from the previous values. However, from the perspective of cumulative year - on - year growth and absolute scale in the first half of the year, they were at relatively high levels in recent years. The sustainability of the year - on - year increase in personal income tax remains to be observed [3]. - **Consumption Tax and Corporate Income Tax**: In June, corporate income tax increased by 2.7% year - on - year (previous value: 0.0%), and vehicle purchase tax increased by 6.0% year - on - year. The acceleration of consumption tax (2.0%) deviated from the year - on - year decline in social retail sales, which may reflect differences in the tax collection rhythm within the year [3]. - **Real Estate - Related Taxes**: In June, the year - on - year decline of transaction - related taxes (deed tax, land value - added tax) narrowed slightly, and the year - on - year growth rates of holding - related taxes such as property tax and arable land occupation tax were 20.7% and 9.6% respectively, which may be related to the rebound in the new construction and construction area of real estate, but the investment side is still at the bottom - grinding stage [4]. - **Stamp Duty and Securities Transaction Stamp Duty**: In June, stamp duty and securities transaction stamp duty increased by 30.7% and 67.1% year - on - year respectively, mainly due to the increase in stock market trading volume and activity [5]. 3. General Budget Expenditure - **Expenditure Growth**: In June, general public budget expenditure increased by 0.4% year - on - year, down from the previous value of 2.6%. The cumulative year - on - year growth in the first half of the year was 3.4%, falling below the annual target of 4.4% [6]. - **Expenditure by Category**: - **Livelihood - Related Expenditure**: In June, social security and employment and health expenditures increased by 8.2% and 5.6% year - on - year respectively, showing resilience, while education expenditure growth slowed to 2.4% (previous value: 3.5%) [6]. - **Infrastructure - Related Expenditure**: In June, expenditures on agriculture, forestry and water, transportation, and urban and rural communities decreased by 10.0%, 12.7%, and 8.1% year - on - year respectively. The year - on - year growth rate of narrow - based infrastructure investment in June was 2.0% (- 3.1 pct), showing a certain slowdown, which may be related to the infrastructure funding gap period [6]. - **Science and Technology and Debt Interest Expenditure**: In June, science and technology expenditure increased by 18.1% year - on - year, while debt interest expenditure decreased by 6.3% year - on - year. As of the end of June, the cumulative net issuance of national debt was 3.4 trillion, and the net issuance of local debt was 4.4 trillion, with a total net issuance of government bonds of 7.8 trillion, accounting for nearly 60% of the annual quota. The budget expenditure completion rate in the first half of the year was only about 48%, the same as last year, which may be restricted by the decline in non - tax revenue and the narrow - based infrastructure gap period [8]. 4. Government - Managed Fund Revenue - **Revenue Growth**: In June, national government - managed fund revenue increased by 20.8% year - on - year (previous value: - 8.2%), reaching a new monthly high since 2021. The cumulative year - on - year decline in the first half of the year narrowed to - 2.4%, approaching the annual budget target of 0.7%. The cumulative year - on - year decline in state - owned land use right transfer revenue narrowed to - 6.5% (previous value: - 11.9%) [9]. - **Revenue Progress**: In the first half of the year, government - managed fund revenue completed about 31% of the annual progress, slightly faster than the past two years. However, the real - estate recovery foundation is not solid, and the sustainability of the stabilization of land transfer revenue remains to be observed. Policy - side efforts such as urban renewal may become new directions [9]. 5. Government - Managed Fund Expenditure - **Expenditure Growth**: In June, national government - managed fund expenditure increased by 79.2% year - on - year, up 70 percentage points from the previous value. The cumulative year - on - year growth in the first half of the year was 30.0%, exceeding the annual budget target of 23.1%, and the annual budget completion rate was about 37%, significantly faster than the same period last year [10]. - **Reasons for Growth**: The significant increase in government - managed fund expenditure is due to the continuous marginal improvement of land transfer revenue and the accelerated issuance and use of special bonds. In addition, the 500 - billion - yuan central financial institution capital - injection special treasury bonds for supporting large - state - owned commercial banks were issued in four installments from late April to early June, and most of them may have formed expenditures in June, supporting the year - on - year growth of central - level government - managed fund expenditure to reach 600% [10].