Politburo Lays Out H2 Economic Agenda, Emphasizes Counter-Cyclical Steps and Fiscal-Monetary Coordination
China’s top leadership met on July 30 to set the economic course for the second half of 2026, stressing more proactive fiscal policy, moderately accommodative monetary settings, and stronger counter-cyclical adjustment. The Politburo called for accelerating fiscal expenditure and bond-fund use to expand domestic demand and improve supply. Second-quarter GDP growth eased to 4.3% from 5.0% in the first quarter. Broad fiscal space available in the second half exceeds RMB7 trillion, comprising RMB3.66 trillion from the deficit, RMB2.33 trillion from new special bonds, RMB728 billion from ultra-long-term special bonds and RMB300 billion from capital-injection bonds. New policy financial instruments total RMB800 billion, up RMB300 billion from 2025, with funds to be deployed mainly in the second half.
The Political Bureau of the CPC Central Committee held a meeting on July 30 to analyze the current economic situation and map out second-half economic work. The meeting called for implementing a more proactive fiscal policy and a moderately accommodative monetary policy, fully leveraging the effectiveness of existing policies, and promptly planning and introducing pragmatic and effective incremental policies. It stressed increasing counter-cyclical adjustment and intensifying efforts to expand domestic demand and optimize supply, while effectively safeguarding and improving people’s livelihoods.
The meeting emphasized that macro policies should be more forceful and effective. It urged accelerating the pace of fiscal spending and bond fund utilization, strongly advancing the construction of “two major” projects and the “two new” initiatives, and securing the “three guarantees” baseline at the grassroots level. The meeting proposed comprehensively deploying and adjusting monetary policy tools as needed, and optimizing fiscal-financial coordination policies to boost domestic demand.
China’s GDP grew 4.3% year-on-year in the second quarter of 2026, a marked slowdown from the 5.0% pace in the first quarter. Broad fiscal space available in the second half exceeds RMB7 trillion, with the remaining quotas for the deficit, new special bonds, ultra-long-term special government bonds, and capital-injection special bonds standing at RMB3.66 trillion, RMB2.33 trillion, RMB728 billion and RMB300 billion, respectively. The total amount of new-type policy financial instruments for 2026 is RMB800 billion, an increase of RMB300 billion from 2025, and the related funds will be deployed mainly in the second half.
The meeting pointed to the need to effectively expand domestic demand, expand quality supply in response to the consumption needs of different groups, and tap the potential of service consumption.