China Economists Warn Revenue Weakness May Limit Fiscal Push

Chinese economists warn that a prolonged decline in government revenue could constrain Beijing’s fiscal expansion plans even as authorities keep the budget deficit and borrowing at historically high levels.

China’s draft 2026 budget report targets an official deficit-to-GDP ratio of about 4%, matching last year’s record. 

Beyond the headline deficit, the central government plans to issue 1.3 trillion yuan ($189 billion) in ultra-long special treasury bonds to support major national strategies, equipment upgrades and consumer trade-in programs, while local governments plan to issue 4.4 trillion yuan in new special-purpose bonds for major projects, hidden-debt swaps and clearing government arrears, among other purposes.