China Politburo lays out H2 agenda: speed fiscal spending, bond use; push 'two major, two new' programs

The Political Bureau of the Communist Party of China Central Committee convened a meeting on July 30 to map out economic work for the second half of the year, calling for "implementation of a more proactive fiscal policy." The meeting stressed that macro policies should exert force and improve efficiency, accelerate the pace of fiscal spending and the use of bond funds, vigorously advance the construction of "two major" projects (referring to the implementation of major national strategies and security capacity building in key areas) and the "two new" initiatives (large-scale equipment renewals and consumer goods trade-ins), firmly safeguard the grassroots "three guarantees" bottom line (ensuring basic living standards, wage payments and the functioning of grassroots government), comprehensively employ and adjust monetary policy tools at appropriate times, and optimize fiscal-financial coordination policies to boost domestic demand.

Since the start of 2026, fiscal spending has generally been front-loaded. Ministry of Finance data show that in the first half, general public budget expenditure reached RMB14.33 trillion, a year-on-year increase of 1.5%, with healthcare spending and social security and employment spending up 10.8% and 7.6%, respectively. In the first half, broad fiscal revenue (the sum of the general public budget and government-managed fund budget) rose 1.0% year-on-year, while expenditure fell 2.9%.

The more proactive fiscal policy for 2026 includes the issuance of RMB1.3 trillion in ultra-long special government bonds to support the "two major" construction projects and the "two new" policies. By early July, the National Development and Reform Commission had fully allocated the list of "two major" construction projects and the equipment renewal funds. In the first half, RMB572 billion of ultra-long special bonds were issued, with the remaining RMB728 billion planned for issuance by mid-October.

The meeting reiterated the need to firmly protect the grassroots "three guarantees" bottom line. In the first half, the Ministry of Finance allocated RMB1.2 trillion in basic old-age insurance subsidies and RMB386.4 billion in urban and rural residents' basic medical insurance subsidies. Tang Zaifu, deputy director-general of the Budget Department of the Ministry of Finance, said that some earmarked transfers were reduced to increase general fiscal transfers, and the central government's share of costs was temporarily raised for child-rearing subsidies and one-year tuition-free pre-school education, thereby easing local fiscal expenditure pressure.

In 2026, China innovatively launched a RMB100 billion package of six policies featuring fiscal-financial coordination to boost domestic demand, using fiscal interest subsidies to provide targeted support for private investment and household consumption. From January to June, new lending to small and micro enterprises, equipment renewal loans, loans to service-sector operators and personal consumption loans in related fields totaled over RMB17 trillion, a year-on-year increase of 4.6%. The two consumption-boosting policies supported approximately RMB1.31 trillion in consumer spending, representing roughly 99 million person-times of subsidy benefits.