Core Insights - The Ministry of Finance's Treasury Payment Center reported that in the first three quarters, local government special bonds, ultra-long-term special national bonds, and special national bonds for central financial institution capital injection totaled 4.21 trillion yuan, enhancing economic development momentum and promoting a sustained recovery in the economy [1] Group 1 - The total expenditure from various bond types reached 4.21 trillion yuan [1] - The funding is aimed at boosting economic development and supporting a positive economic recovery trend [1]

Core Viewpoint - The fiscal policy for the second half of 2025 needs to focus on seven key areas: emphasizing changes in economic development momentum, stabilizing price levels, continuously innovating fiscal efforts, prioritizing livelihood expenditures, accelerating government debt disposal, actively utilizing policy financial tools, and emphasizing the social benefits of fiscal policy [2][10][12]. Fiscal Revenue and Expenditure Status - In the first half of 2025, China's fiscal revenue showed marginal improvement but still faced pressure, with general public budget revenue growth at -0.3% and government fund budget revenue at -2.4%, leading to a combined growth rate of -0.6% [5][6]. - Tax revenue growth was positive for three consecutive months from April to June 2025, with significant contributions from industries such as railway, shipbuilding, and aerospace equipment (32.2% growth) and scientific research services (13.8% growth) [5][17]. - Non-tax revenue showed a rapid decline, with June's non-tax revenue at 518.4 billion yuan, down 3.7% year-on-year, likely due to a high base in 2024 [5][17]. - Central and local public budget revenues exhibited significant divergence, with central general public budget revenue at 48,589 billion yuan (-2.8% growth) and local revenue at 66,977 billion yuan (1.6% growth) [7][18]. Fiscal Expenditure Characteristics - The overall fiscal expenditure growth in the first half of 2025 was below the initial budget target, with general public budget expenditure growth at 3.4% and government fund budget expenditure growth at 30%, leading to a combined growth of 8.9% [8][9]. - Fiscal expenditure showed a clear focus on social welfare, with expenditures in social security, health, and education exceeding budget completion rates [9][20]. - The structure of fiscal expenditure is increasingly tilted towards livelihood support, with social security and low-income group expenditures growing at 6.6%, while infrastructure spending declined by 3.2% [9][20]. Policy Directions for the Second Half of 2025 - The economic development momentum is expected to shift, influenced by external uncertainties such as U.S. tariffs and domestic consumption patterns, necessitating adjustments in fiscal policy [10][11]. - Price stability is crucial, as fluctuations in price levels can significantly impact tax revenue, particularly in a tax system dominated by turnover taxes [10][11]. - There is a need for continued innovation in fiscal policy, with room for expanding fiscal expenditure due to slower-than-expected spending in the first half of 2025 [11][21]. - Emphasis on livelihood expenditures should focus on improving income expectations and wealth perceptions, with potential measures including increasing state-owned enterprise contributions to social security funds [12][21]. - Accelerating government debt disposal and enhancing the quality and scope of debt instruments are essential to stabilize corporate cash flows and stimulate economic activity [12][22]. - The use of policy financial tools should be expanded to direct funds towards key sectors and address market failures [12][22]. - The social benefits of fiscal policy must be prioritized, shifting from a debt-driven growth model to one that emphasizes consumption and domestic demand [13][22].