中国宏观经济：两会再解读-财政赤字持平、供给优先、五年规划中的精准再平衡-China Economics-NPC Second Read Flat Deficit, Supply First, Calibrated Rebalance in Five-Year Plan

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the China Economics sector, specifically discussing the outcomes of the National People's Congress (NPC) regarding fiscal policy and the Five-Year Plan (FYP) for economic rebalancing. Core Insights and Arguments - Flat Fiscal Package: The augmented fiscal deficit announced at NPC remains unchanged at 10.4% of GDP for 2026, consistent with 2025 levels. The budget deficit is projected at Rmb 5,890 billion, maintaining a 4.0% ratio to GDP [2][6][8]. - Government Funding Adjustments: The local government special bond (LGSB) quota is reduced by Rmb 500 billion compared to 2025, but this shortfall is compensated by an increase in transfers from government funds and local government carryover, which rose by Rmb 575 billion [2][6]. - Increased Quasi-Fiscal Spending: Quasi-fiscal spending has increased by Rmb 300 billion to support major infrastructure projects, indicating a continued focus on capital expenditure (capex) [2][8]. - Economic Rebalancing: Over 50% of the on-budget spending increase of 4.4% is directed towards social welfare and consumption, although the majority of the augmented deficit is still capex-centric, emphasizing technology, urban renewal, and green transition [3][8]. - Five-Year Plan Goals: The FYP will not include a specific GDP growth target, similar to the previous plan. However, it will set numerical goals for livelihoods, technology, and green transition. The commitment to increasing the consumption share of GDP is reiterated, but a clear quantitative target remains uncertain [4][8]. Additional Important Insights - Consumption Support: The support for consumption remains modest, with a slight increase in budget spending on livelihood initiatives, while the support for trade-in programs has been reduced [8]. - Fiscal-Monetary Coordination: An allocation of Rmb 100 billion is designated for interest subsidies aimed at small and medium-sized enterprises (SMEs), equipment upgrades, and consumer loans, indicating a strategic approach to stimulate economic activity [8]. - Market Confidence: The lack of a clear quantitative target for consumption could undermine market confidence in the government's commitment to medium-term economic rebalancing [4]. This summary encapsulates the key points discussed in the conference call, highlighting the fiscal strategies and economic outlook for China as articulated during the NPC.