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 - National fiscal expenditure in January-February 2026 was 4.7 trillion yuan, with a year-on-year growth of 3.6%, slightly below the annual target growth rate of 4.4%[4] - The progress of public fiscal expenditure was 15.6%, higher than the same period last year and faster than the 5-year average of 14.8%[4] - Significant increases were noted in social security and employment expenditures, which rose by 16 percentage points[16] Fund Insights - Government fund income decreased by 16% year-on-year, significantly below the budget target of 0.6%, with land use rights income dropping by 25.2%[5] - Government fund expenditure grew by 16%, surpassing the target growth rate of 5.1%, primarily due to the issuance of new special bonds[5] - The progress of government fund expenditure reached 11.1%, marking the highest level since 2020 for the same period[5] 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 recovery of the Producer Price Index (PPI) may amplify policy effects, leading to moderate fiscal expansion that could boost total demand[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]

Group 1: Report's Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - In February, the overall credit and social financing were stable. The increase in corporate loans might be related to the accelerated fiscal expenditure. The follow - up fiscal expenditure acceleration needs further observation. The widening gap between deposit and loan growth rates supports banks to increase bond allocation and inter - bank lending, creating a loose liquidity environment and stabilizing the interest rate ceiling. It is expected that by mid - year, the 10 - year Treasury bond yield may drop to 1.6% - 1.7% [1][4] Group 3: Summary by Related Catalogs Credit and Social Financing Situation - In February, credit was slightly less than the same period last year, and social financing was slightly more, both in line with expectations. The corporate medium - and long - term loans increased by 350 billion yuan year - on - year to 890 billion yuan. The increase in corporate loans might be related to the accelerated fiscal expenditure [1][7] - In February, the new credit was 900 billion yuan, a year - on - year decrease of 110 billion yuan. Corporate credit increased by 1490 billion yuan, a year - on - year increase of 450 billion yuan, mainly due to the 350 - billion - yuan year - on - year increase in corporate medium - and long - term loans. The new social financing was 2.38 trillion yuan, a year - on - year increase of 146.1 billion yuan, and the stock of social financing increased by 8.2% year - on - year, with the growth rate remaining the same as the previous month. The new government bonds in February were 1.4 trillion yuan, with a slightly slower year - on - year growth, but the overall rhythm was similar to last year. In the first half of 2026, the social financing growth rate may show a gentle downward trend [2][10] M1 and M2 Growth Rates - In February 2026, the year - on - year growth rate of M1 rose by 1 percentage point to 5.9%, which might be related to the increase in corporate credit and corporate foreign exchange settlement and sales. The growth rate of M2 was the same as the previous value, with a year - on - year growth of 9.0%. The stable M2 growth rate was mainly due to the continuous growth of household deposits [3][16] Deposit and Loan Growth Rate Gap - In February, the new deposits were 1.17 trillion yuan, a year - on - year decrease of 3.25 trillion yuan, including a 1.6 - trillion - yuan year - on - year decrease in fiscal deposits. Combining January and February, deposits still increased by 520 billion yuan year - on - year. The year - on - year growth rate of deposits at the end of February was 8.7%, the same as at the end of December last year. After excluding fiscal deposits, the growth rate of other deposits increased. The combined loans from January to February were 530 billion yuan less than the same period last year, and the year - on - year growth rate slowed down from 6.4% in December last year to 6.0% in February. The widening gap between deposit and loan growth rates led to an increase in the bank's asset gap, and banks needed to allocate bonds and conduct fund lending to make up for the gap [3][19]

Economic Data and Events - The US manufacturing and services PMI, as well as consumer confidence, exceeded expectations, while employment data was significantly weaker than anticipated [2][14] - In the Eurozone, January manufacturing PMI showed a greater rebound than the initial value, but services PMI and retail sales fell short of expectations; inflation met expectations and remained stable compared to the previous value [2][14] - Japan's manufacturing and services PMI both improved in January [2][14] Upcoming Economic Data and Events - Key focus on the US non-farm payroll report for January to be released on February 11 and the US CPI data for January to be released on February 13 [3][16] Weekly Economic Activity Index - The US economic activity index remained stable, with the WEI index at 2.13% for the week ending January 31, down from 2.49% the previous week [4][18] - Germany's economic activity index returned to positive territory, with the WAI index at 0.1% for the week ending February 1, compared to -0.01% the previous week [5][18] Demand - US Redbook commercial retail year-on-year growth rate showed fluctuations, with a reading of 6.7% for the week ending January 30, down from 7.1% the previous week [6][21] - The US mortgage rate stabilized, with the 30-year mortgage rate at 6.11% on February 5, slightly up from 6.10% the previous week; mortgage applications fell, with the MBA market composite index at 330.8, down 8.9% week-on-week [6][24] Employment - Initial jobless claims rose to 231,000 for the week ending January 31, up from 209,000 the previous week; continuing claims increased from 1.819 million to 1.844 million for the week ending January 24 [7][27] - The number of job vacancies remained stable, with the Indeed job vacancy index at 103.9 as of January 30, slightly lower than the December average of 104.2 [8][29] Prices - Commodity prices experienced a significant pullback, with the RJ/CRB commodity price index down 3.3% week-on-week as of February 6 [9][34] - US gasoline prices stabilized at $2.75 per gallon for the week ending February 2, showing no change from the previous week [9][36] Financial Conditions - Financial conditions in the US and Europe showed signs of recovery, with the Bloomberg financial conditions index for the US at 0.755 on February 6, up from 0.539 the previous day [10][39] - Offshore dollar liquidity remained stable, with narrow fluctuations in swap basis [11][41] - High-yield dollar bond spreads widened but showed signs of recent recovery, with the spread-to-worst for JPMorgan's global BB-B rated dollar bonds at 256.3 basis points [11][43] - The yield spread between US and Japanese bonds narrowed, while the spread between Italian and German bonds widened [11][46] Fiscal Data - As of February 5, cumulative federal funding expenditures in the US increased by 3.8% year-on-year, totaling approximately $784.5 billion [12][49][52]

Group 1 - The core viewpoint is that the overwhelming victory of Japanese Prime Minister Fumio Kishida may lead to upward pressure on long-term Japanese government bond yields due to potentially more aggressive fiscal spending, which could increase fiscal and inflation risks [1] - The market is currently assessing the impact of the Liberal Democratic Party's victory on currency dynamics, indicating potential short-term volatility in the yen [1] - With the Federal Reserve remaining on hold and the Bank of Japan not expected to raise interest rates until the second quarter, the USD/JPY exchange rate may approach the 160.00 level again [1]

Core Viewpoint - In 2025, China will implement a more proactive fiscal policy for the first time, with total fiscal spending exceeding 40 trillion yuan, marking a year-on-year increase of 3.7% [2][3] Fiscal Spending and Revenue - The total fiscal spending in 2025 is projected to be approximately 40.03 trillion yuan, while fiscal revenue is expected to be around 27.38 trillion yuan, reflecting a year-on-year decline of about 2.9% [2] - The fiscal deficit will exceed 12.65 trillion yuan, representing a year-on-year increase of 21.3% [2] - The general public budget expenditure is estimated at 28.74 trillion yuan, with a growth rate of 1%, while government fund expenditure is expected to reach 11.29 trillion yuan, growing by 11.3% [3] Fiscal Policy and Economic Support - The fiscal policy aims to counter economic downturn pressures by increasing the deficit ratio and expanding debt scale, thereby maintaining necessary spending intensity [2][3] - The structure of public budget expenditure is continuously optimized, focusing on social security, education, and health, which are projected to grow at rates of 6.7%, 3.2%, and 5.7% respectively, significantly above the average growth rate of 1% [3][4] Revenue Challenges - The general public budget revenue is expected to decline to approximately 21.61 trillion yuan, a decrease of 1.7% from the previous year, with tax revenue slightly increasing by 0.8% to about 17.64 trillion yuan [8] - Non-tax revenue is projected to drop by 11.3% to around 3.97 trillion yuan, primarily due to insufficient domestic demand and ongoing adjustments in the real estate market [8][9] Government Debt and Financing - The government bond issuance scale and net financing are expected to reach new highs in 2025, with net financing projected at 13.84 trillion yuan, an increase of 2.54 trillion yuan year-on-year [10][9] Future Fiscal Strategy - In 2026, the fiscal policy is anticipated to further strengthen, with an expected deficit rate of around 4% and new special bond quotas potentially reaching 5 trillion yuan [12][13] - The fiscal expenditure structure is expected to shift more towards supporting residents, with increased spending on social security and consumer incentives [14]

Core Viewpoint - The strong demand for Japan's 30-year government bonds in the recent auction alleviated short-term concerns about long-term debt, leading to a decline in yields ahead of the upcoming elections [1][3]. Group 1: Auction Results - The bid-to-cover ratio for the 30-year bonds reached 3.64, significantly higher than the previous auction's 3.14 and above the 12-month average of 3.35, indicating increased investor interest [4]. - The yield on the 30-year bonds fell by 5 basis points to 3.585%, while the 10-year bond yield decreased by 1.5 basis points to 2.23%, reflecting a positive market sentiment [1][4]. - Over 23% of the bonds were purchased by two large domestic companies, which is expected to support stable trading in the secondary market [4]. Group 2: Market Sentiment and Political Context - Despite concerns over rising fiscal spending, the auction results suggest that higher yield levels are attracting buyers, indicating a potential increase in demand as political uncertainties diminish [3][4]. - The upcoming House of Representatives election on February 8 will determine future fiscal spending, adding complexity to the current market environment [5]. Group 3: Currency and Monetary Policy Considerations - The depreciation of the yen has become a focal point, with hedge funds resuming short positions ahead of the elections, indicating concerns over currency volatility [6]. - Investors are closely monitoring how the election results may influence the Bank of Japan's interest rate path, as Prime Minister Kishi Sanae is known for advocating monetary easing [7].

Core Insights - The report highlights the stable growth of Hebei's economy and fiscal revenue, with a notable increase in the revenue of the Xiong'an New Area [2][5]. Fiscal Performance - In 2025, Hebei's general public budget revenue reached 439.86 billion yuan, a 2% increase, aligning with the national average growth rate of 2.2% [2][3]. - Tax revenue in Hebei for 2025 was 263.84 billion yuan, growing by 3.4%, while non-tax revenue remained stable at 176.02 billion yuan [3]. - The proportion of tax revenue in the general public budget was approximately 60%, indicating room for improvement compared to the national average of about 82% [3]. Government Fund Revenue - The government fund revenue in Hebei for 2025 was 184.07 billion yuan, a decrease of 2%, which is a significant improvement from the previous year's decline of 15.8% [3][4]. - The revenue from land sales has been affected by the ongoing adjustments in the real estate market, leading to a decline in local land sale income [3]. Xiong'an New Area - The Xiong'an New Area's general public budget revenue for 2025 was 3.08 billion yuan, showing a remarkable growth of approximately 45%, significantly higher than the national average [5]. - The government fund revenue for Xiong'an was projected at 25.4 billion yuan, with a 2% increase [5]. Fiscal Expenditure - Hebei's general public budget expenditure for 2025 was 1,024.36 billion yuan, a slight decrease of 0.8%, but a comparable growth of 7.2% when excluding one-time factors [5]. - Social welfare spending accounted for 81.7% of the general public budget expenditure, totaling 836.96 billion yuan [5]. Future Projections - For 2026, Hebei's general public budget revenue is expected to reach 448.66 billion yuan, with a growth rate of around 2% [8]. - The government fund revenue for 2026 is projected to be 224.97 billion yuan, reflecting a growth of approximately 22% [9]. - The Xiong'an New Area's budget revenue for 2026 is anticipated to be 3.5 billion yuan, a growth of about 14%, while the government fund revenue is expected to decline by approximately 17% [10]. Key Spending Areas - The 2026 budget emphasizes spending on public welfare, major national strategies, technological innovation, and the construction of a modern industrial system [11]. - Specific allocations include 1 billion yuan for high-quality construction in Xiong'an and 1.063 billion yuan for promoting technological and industrial innovation [11].

Fiscal Expenditure - In 2025, the national general public budget expenditure is projected to be 28.74 trillion yuan, representing a year-on-year increase of 1% [5] - Key areas of expenditure include social security and employment (up 6.7%), education (up 3.2%), health (up 5.7%), science and technology (up 4.8%), and energy conservation and environmental protection (up 6.1%) [5] Cultural Industry Revenue - In 2025, the revenue of large-scale cultural and related industry enterprises is expected to grow by 7.4%, reaching 1521.35 billion yuan, an increase of 104.51 billion yuan from the previous year [6][8] - The cultural core sector's revenue is projected to be 1031.81 billion yuan, up 11.5%, while related sectors are expected to see a slight decline of 0.4% [9] Investment and Economic Cooperation - In 2025, China's non-financial direct investment abroad is expected to reach 145.66 billion USD, a growth of 1.3% year-on-year [22] - The scale of foreign contracting projects is anticipated to increase, with a completed turnover of 178.82 billion USD, up 7.7%, and new contract amounts reaching 289.22 billion USD, up 8.2% [22] - Labor exports are projected to grow, with 428,000 workers sent abroad, an increase of 4.6% [22] Purchasing Managers' Index (PMI) - In January 2026, the manufacturing PMI is reported at 49.3%, indicating a decline of 0.8 percentage points from the previous month, suggesting a slight contraction in manufacturing activity [12] - The non-manufacturing business activity index is at 49.4%, also down by 0.8 percentage points, reflecting a decrease in market demand [16] - The comprehensive PMI output index stands at 49.8%, down 0.9 percentage points, indicating a general slowdown in production and business activities [18]

Core Viewpoint - The article highlights the current economic indicators in the US, Eurozone, and Japan, noting low unemployment claims in the US, rising commodity prices, and upcoming key economic data releases [2][4][10]. Group 1: Important Economic Data - For the week of January 26-30, US durable goods orders for November exceeded expectations, and December PPI also surpassed forecasts [4][17]. - Eurozone's Q4 GDP and December unemployment rate were better than expected [4][18]. - Japan's December industrial output was above expectations, while January Tokyo CPI fell short [4][20]. Group 2: Weekly Economic Activity Index - The US WEI index rose to 2.49% for the week of January 24, up from 2.16% the previous week [5][22]. - The German WAI index remained low, at 0.04%, showing slight improvement from the previous week [5][22]. Group 3: Demand - The US Redbook commercial retail sales year-on-year growth rate increased to 7.1%, up from 5.5% the previous week [6][26]. - The 30-year mortgage rate in the US was stable at 6.1%, with a slight decline in mortgage applications [6][29]. Group 4: Employment - Initial jobless claims in the US were slightly below expectations at 209,000, while continuing claims fell to 1.827 million, better than anticipated [7][31][32]. - Job vacancy numbers showed stability, with the Indeed job vacancy index at 104.4, slightly lower than December's average [31][35]. Group 5: Prices - Commodity prices saw a significant increase but experienced a notable pullback on Friday. The RJ/CRB commodity price index rose by 2.5% week-on-week [8][36]. - US gasoline prices continued to rebound, reaching $2.75 per gallon, up 1.7% from the previous week [8][36]. Group 6: Financial Conditions - Financial conditions in the US and Eurozone tightened slightly, with the Bloomberg financial conditions index for the US at 0.775, down from 0.812 [9][38]. - Offshore dollar liquidity remained stable, with minor changes in swap basis for both yen and euro against the dollar [9][40]. Group 7: Fiscal - As of January 29, US federal funds cumulative expenditure was approximately $532.4 billion, with a year-on-year growth rate of 2.9% [10][49][50].