Core Viewpoint - The article discusses the fiscal performance in the first half of the year, highlighting strong fiscal spending but a general lack of perceived impact on the economy, suggesting a need for targeted policies to enhance the effectiveness of fiscal measures [5][10][34]. Group 1: Fiscal Strength in the First Half - The broad fiscal expenditure growth rate in the first half of the year was 8.9%, exceeding the annual target growth rate of approximately 3.4% to 5.1% [5][18]. - The fiscal strength observed in the first half is considered the strongest since 2022, with historical comparisons showing varied growth rates from 2018 to 2024 [5][18]. Group 2: Perception of Fiscal Impact - Despite strong fiscal spending, the perceived impact on the economy was limited, attributed to insufficient project construction despite rapid government debt issuance [6][10]. - The net financing of government bonds reached 7.69 trillion yuan in the first half, marking a 55.5% progress rate, the highest since 2022 [6][20]. Group 3: Government Debt Structure - The structure of government debt issuance showed a preference for special refinancing bonds (90%) over general bonds and special bonds for project construction, which were lower at 47.5% and 49.1% respectively [7][22]. - The issuance of special bonds for project capital was 191.7 billion yuan, a 16% increase year-on-year, but significantly lower than the overall growth of special bonds [7][23]. Group 4: Fiscal Expenditure Structure - Fiscal expenditure focused on technology and livelihood, with infrastructure spending declining by 5.5% [8][26]. - Public fiscal expenditure growth rates were 9.2% for science and technology, 6.4% for livelihood, and negative for infrastructure [8][26]. Group 5: Credit Expansion and Local Government Actions - Local credit expansion showed a contraction in major provinces, indicating a cautious approach to financing [9][31]. - The reduction in the number of financing platforms was noted, which supports the transformation of these platforms towards more sustainable financing models [9][32]. Group 6: Outlook for the Second Half - The focus for the second half of the year is on incremental policies, with expectations of improved fiscal perception due to new policy tools and project support [10][35]. - Historical patterns suggest that when fiscal revenues fall short, incremental policies are typically introduced to compensate [13][41]. Group 7: June Fiscal Data Review - In June, fiscal revenue showed a slight decline of 0.3%, with tax revenue increasing for three consecutive months, driven by specific sectors like transportation and scientific research [15][46]. - Government fund income growth was notably high at 20.8%, primarily due to increased land sales [15][66].

Core Viewpoint - The article discusses the characteristics of the fiscal situation at the beginning of the year, highlighting a "low income" and "high deficit" environment, which may lead to a "technology stock-friendly" fiscal policy throughout the year [3][4][5]. Group 1: Low Income - The public fiscal revenue experienced a rare negative growth of -1.6% at the beginning of the year, with a budget target of 0.1% [4][12]. - The revenue from land sales continued to decline significantly by -15.7%, contributing to a double-digit drop in secondary account revenue of -10.7% [4][12]. - If the income side remains under pressure, it may force incremental policies that further elevate the "high deficit" and support "medium expenditure," reinforcing the "technology stock-friendly" fiscal approach [4][12]. Group 2: High Deficit - The public fiscal deficit recorded in January-February was 124 billion, marking the first occurrence of a narrow deficit at the start of the year in nearly 30 years [5][15]. - The broad fiscal deficit reached 621.7 billion, the highest for the same period in recent years, indicating a strong subjective willingness to stimulate the economy [5][15]. - The dual deficit pattern suggests that the fiscal policy continues to support risk appetite, reflecting an increase in local government activity since October of the previous year [6][15][17]. Group 3: Medium Expenditure - The growth rate of broad fiscal expenditure was 2.9%, slightly above the previous year's rate of 2.7%, indicating limited fiscal strength [7][21]. - Expenditure focused on technology (+10.6%) and social welfare (social security +6.7%, education +7.7%), while infrastructure spending was under pressure, with declines in community and agricultural spending [7][21]. - The budget arrangements for the year show that growth rates for technology and social welfare expenditures are significantly higher than the nominal GDP growth rate, while infrastructure growth is only around 1% [7][21]. Group 4: Debt Issuance - The issuance of deficit bonds has been rapid, indicating a fiscal preference for supporting consumption, with net financing of government bonds reaching nearly 1.5 trillion in Q1, the highest for the same period in recent years [9][22]. - In contrast, the issuance of new special bonds has been slow, suggesting that investment may be accelerated in the second quarter, with plans for significant special bond issuance already disclosed [9][23]. - The issuance of long-term special bonds is expected to start in the second quarter, potentially leading to more substantial physical investment [9][23]. Group 5: Fiscal Data Review - The fiscal revenue for January-February showed a rare negative growth of -1.6%, with significant contributions from sectors like rail and ship manufacturing, and computer technology [25][29]. - The expenditure growth rate for January-February was 3.4%, with a focus on technology and social welfare, reflecting the characteristics of the annual budget [46]. - The broad fiscal situation remains supported by a new high in deficits, with land sales continuing to be weak, indicating a challenging fiscal environment ahead [51][52].