Analysis: China’s Fiscal Health Shows Signs of Mending
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China’s fiscal data for September revealed two main characteristics. First, an overall improvement in revenue and expenditure, with a particularly strong performance in tax revenue, where the growth rate of 8.7% hit a high not seen since July 2023. While the improvement in domestic value-added tax (VAT) and consumption taxes was largely due to a low base effect, there were solid gains in personal income tax, stamp duty, VAT and consumption taxes on imports, tariffs, and real estate transaction taxes. Corporate income tax also maintained high growth.
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- In September, China's tax revenue grew 8.7%, led by personal income tax (+16.7%) and corporate income tax (+19.6%), both driven by strong capital market activity and policy effects.
- Policymakers introduced 1 trillion yuan ($137.2 billion) in new fiscal funding channels, with some funds designated for investment in major provinces.
- Infrastructure spending picked up; real estate transaction taxes improved after policy easing, while science and tech spending rose 26.7%, largely due to a low base effect.
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Who’s Who
- CITIC Construction Securities
- Zhou Junzhi, the chief macro analyst at CITIC Construction Securities, provided insights into China's September fiscal data. His analysis highlighted an overall improvement in revenue and expenditure, with strong tax revenue performance and the opening of new channels for supplementary fiscal funding.
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What Happened When
- July 2023：
- China's tax revenue growth last reached the high growth rate seen in September 2025.
- September 2024：
- The government accelerated special-purpose bond issuance, resulting in a high base for government-managed fund spending compared to September 2025.
- March 2025：
- September 2025 personal income tax growth was the fastest since this month.
- First three quarters of 2025：
- Personal income tax from equity transfers, transfers of restricted shares, and interest, dividends, and bonuses grew by 12.4%, 77.7%, and 11.3% year-over-year, respectively.
- By September 2025：
- The Ministry of Finance allocated another 500 billion yuan from the carry-over debt ceiling, 100 billion yuan more than last year.
- September 2025：
- Fiscal data showed overall improvement; general public budget revenue rose 2.6%, tax revenue climbed 8.7% (fastest since July 2023), non-tax revenue fell 11.4%, spending rose 3.1%, government-managed fund revenue rose 5.6%, and spending from these funds grew 0.4%. Personal income tax surged 16.7% (fastest growth since March 2025), stamp duty rose 189%, corporate income tax grew 19.6%, VAT and consumption taxes on imports jumped 2.1%, tariffs rose 11%, commercial housing floor space sales growth rebounded to 6.7% in 30 cities, science and technology spending grew 26.7%.
- End of September 2025：
- Policymakers arranged for 500 billion yuan in new policy-oriented financial instruments.
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