Politburo Sets H2 Economic Course: Bolder Fiscal, Looser Monetary Policy

The Political Bureau of the Communist Party of China Central Committee met on July 30 to analyze the current economic situation and arrange economic work for the second half of the year. The meeting called for accelerating the transition between old and new growth drivers, implementing a more proactive fiscal policy and a moderately loose monetary policy, fully leveraging the effectiveness of existing policy measures, and promptly devising pragmatic incremental policies. It also stressed stepping up counter-cyclical adjustment, expanding domestic demand, optimizing supply, safeguarding and improving people's livelihoods, and boosting development momentum and social vitality.

Real GDP grew 4.3% year on year in the second quarter, down 0.7 percentage points from the first quarter, while nominal GDP growth rose to 5.9%, up about 0.9 percentage points from Q1. The GDP deflator turned positive on a year-on-year basis in Q2, ending a 12-quarter stretch of negative growth that began in Q2 2023. However, fixed-asset investment declined and indicators such as total retail sales of consumer goods showed fluctuations. In the first half, national general public budget expenditure reached RMB 14.33 trillion, up 1.5% year on year, with health spending up 10.8% and social security and employment spending up 7.6%.

The meeting made clear that macro policy should be strengthened and made more effective, with faster progress in fiscal spending and bond fund utilization, vigorous advancement of the "two major" projects and the "two new" initiatives, and a firm bottom line for basic "three guarantees" at the grassroots level. It called for comprehensive use and timely adjustment of monetary policy tools and optimized implementation of fiscal-financial coordination policies to boost domestic demand. The meeting stressed effectively expanding domestic demand, adapting to the consumption needs of different groups to expand quality supply, tapping the potential of service consumption, and steadily advancing the planning and construction of the "six networks." Yang Te, deputy director of the Department of National Economic Comprehensive Affairs at the National Development and Reform Commission, said the next step will be to accelerate the deployment of various types of government investment, coordinate the construction of the "two major" projects, push forward the 109 major projects outlined in the 15th Five-Year Plan outline, and coordinate the planning and construction of the "six networks" and facilities in five key areas. To sustain vitality in private investment, the government will fully leverage the role of special funds for fiscal-financial coordination to boost domestic demand, accelerate the implementation of interest subsidy policies, improve the long-term mechanism for private enterprises to participate in major national projects, make good use of special guarantee policy tools for private investment, and promote the expansion and efficiency of real estate investment trusts in the infrastructure sector.

The meeting also mentioned accelerating the building of a modern industrial system, strengthening long-term and stable support for basic research, deeply implementing the "artificial intelligence plus" initiative, developing new forms of the intelligent economy, improving the AI governance system, actively promoting breakthroughs in frontier technologies and the development of future industries, striving to foster new pillar industries, and continuing to promote the transformation and upgrading of traditional industries. In the first half, China's exports, measured in US dollars, rose 17.6% year on year, higher than the 5.5% growth level in 2025.