Fiscal policy for 2026 to be more proactive

China will continue to pursue a more proactive fiscal policy next year with enhanced precision and effectiveness, to promote an effective improvement in the quality of the economy and a reasonable expansion in its scale, while maintaining social harmony and stability, said Finance Minister Lan Fo'an.

He said on Saturday that the goal is to lay a strong foundation for a successful start to the 15th Five-Year Plan (2026-30) period, calling on fiscal authorities at all levels to focus on expanding domestic demand, upgrading the economic structure, strengthening growth drivers, and improving people's livelihoods, while prioritizing the stabilization of employment, businesses, markets and expectations, and simultaneously advancing reforms, enhancing management, mitigating risks and boosting efficiency.

He made the remarks at the national work conference for the fiscal system held in Beijing on Saturday and Sunday, during which he summarized the achievements of the fiscal system in 2025 and outlined its key tasks for 2026.

"We will expand the scale of fiscal expenditure to ensure adequate funding for necessary spending, and optimize the mix of government bond instruments to enhance their effectiveness," Lan said.

"We will also improve the efficiency of transfer payments to strengthen local governments' available and flexible fiscal resources," he said.

The authorities will also refine the expenditure structure to better support key priority areas, while strengthening coordination between fiscal and financial policies to amplify policy effectiveness, he added.

Key tasks in the fiscal area for the next year include making domestic demand the main engine of growth and building a robust domestic market, while accelerating the integration of technological and industrial innovation to foster new growth drivers and advancing urban-rural integration and regional coordination to create more room for development.

Other tasks include better safeguarding people's livelihoods, promoting a comprehensive green transition in economic and social development, and strengthening international financial and economic cooperation to further advance high-standard opening-up, Lan said.

Highlighting efforts to boost consumption, Lan said, "We will press ahead with the targeted initiative to spur consumption, actively expand effective investment, and step up input in key areas such as new quality productive forces and people-centered development."

"To accelerate the building of a unified national market, we will also standardize tax incentives and fiscal subsidy policies," he said.

The ministry will also ramp up fiscal support for science and technology, improve fund oversight and strengthen enterprises' key role in innovation, Lan said.

Efforts will be made to push ahead with high-quality development of key industrial chains, and a fresh round of pilot programs will be launched in selected cities for technology upgrades in the manufacturing sector, in order to accelerate the building of a modern industrial system, he added.

Moreover, Lan noted that the ministry will continue efforts to advance rural vitalization, support people-centered urbanization, and promote more coordinated regional development.

According to Lan, the ministry will further boost employment and incomes, improve people-centered education, enhance access to healthcare, and strengthen the social safety net, while unlocking new room for development by better meeting people's livelihood needs.

The senior official also highlighted advancing pollution control and ecosystem restoration, strengthening support for green and low-carbon development, and taking a coordinated approach to decarbonization, pollution reduction, ecological restoration and growth to energize green development.

In addition, sustained efforts will focus on advancing reforms in global economic and financial governance, strengthening international trade and economic cooperation, and ensuring the effective implementation of goods-related tax policies for the island-wide special customs operations of the Hainan Free Trade Port, Lan said.

He also emphasized the importance of comprehensively strengthening fiscal scientific management, deepening pilot programs in scientific fiscal management and firmly securing "three guarantees": safeguarding basic living needs, ensuring salary payments, and maintaining grassroots operations.

Risk resolution must go hand in hand with building long-term mechanisms and maintaining rigorous oversight of government debt, he said, adding that fiscal and tax system reforms should be deepened, with a balance between steady implementation and bold innovation.

He said asset management must combine safeguarding and efficient utilization to improve the management system of State-owned assets, and precise problem identification with effective solutions is needed to strengthen financial and accounting supervision.

The minister noted that 2025 has witnessed China's fiscal system making new achievements, with substantial contributions to advancing toward socioeconomic development goals and targets.

For instance, fiscal authorities have kept fiscal spending robust, increased support for key national priorities, broadened and intensified trade-in programs for equipment and consumer goods, and unlocked consumption potential on both the supply and demand sides, Lan said.

"Focusing on high-quality development, we have substantially stepped up investment in basic research and launched city-level pilots for next-generation technology upgrades, alongside digital transformation pilots for small and medium-sized enterprises," Lan said.

As for people's well-being, Lan said that fiscal authorities have strengthened policy tools to support stable employment, made steady progress toward free preschool education, raised national scholarship and student grant levels, and put in place a childcare subsidy program.

"We have moved to contain risks in key areas, strengthened end-to-end oversight of the swap of local government hidden debt, and advanced the orderly wind-down and real transformation of local government financing platforms through a differentiated approach," Lan said.

Moreover, fiscal authorities have pushed zero-based budgeting reforms in local governments, fine-tuned policies such as value-added tax credit refunds, and upgraded the government procurement framework, Lan added.

Zhu Yu, leading partner of financial services at Pan-China Certified Public Accountants, a major accounting service provider in China, said that a more proactive fiscal policy, implemented with greater precision and effectiveness, would provide more certainty for businesses seeking transformation and upgrades, deliver more tangible benefits to households, and further enhance the financial sustainability of local governments.

"This will contribute to fostering a virtuous cycle, with market momentum recovering, employment and incomes improving, and domestic demand strengthening, laying a solid foundation for long-term economic growth," Zhu added.

An official from Sichuan province's fiscal delegation at the work conference told China Daily that a package of measures featuring lighter burdens, broader support and stronger incentives has fueled a sustained rebound in the province's consumption market this year.

He noted that from January to November, Sichuan's total retail sales of consumer goods reached 2.64 trillion yuan ($376.8 billion), growing 5.5 percent year-on-year — 1.5 percentage points more than the national average.

"Looking ahead, we will keep expanding domestic demand as a key strategic focus, advance targeted measures to boost consumption, fine-tune the trade-in programs, encourage a stronger supply of quality goods and services, and further unleash consumption potential," he added.

Contact the writers at liuzhihua@chinadaily.com.cn