Fiscal Support Helps Ensure Growth

A report from chinadaily.com.cn on May. 7th, 2025:

China’s stepped-up fiscal policies are emerging as a pillar in its efforts to stabilize the economy, offering much-needed support to sectors under financial strain and helping the world’s second-largest economy weather persistent global uncertainty.

In 2025, the country pledged to intensify counter-cyclical adjustments, raising the deficit-to-GDP ratio to 4 percent and setting the government deficit at 5.6 trillion yuan ($784.5 billion), both at their highest levels in recent years.

While vowing a more proactive fiscal policy, China plans to issue 1.3 trillion yuan in ultra-long special treasury bonds, up from 1 trillion yuan in 2024, alongside 4.4 trillion yuan in local government special-purpose bonds.

Data point to an accelerated rollout of bond issuances. In the first quarter alone, the total issuance of government treasury bonds surpassed 3.3 trillion yuan, while local government bond issuance exceeded 2.8 trillion yuan, an over 80 percent increase from the same period last year.

These funds are swiftly being channeled into efforts to boost consumer demand, accelerate infrastructure investment and subsidize people in difficulties. Economists said this front-loaded fiscal drive reinforces short-term stability and leaves ample leeway for further issuances of ultra-long treasury bonds and capital support measures for banks later in the year.

Across China, tens of millions of consumers are tapping into this multibillion dollar trade-in program, as the government places renewed emphasis on consumer spending and domestic demand.

To support the initiative, the government funding for the national consumer goods trade-in program has doubled from 150 billion yuan in 2024 to 300 billion yuan this year, delivered through ultra-long special treasury bonds.

So far, the efforts have been translating into robust domestic demand. As of April 25, more than 120 million consumers had received subsidies under the program, driving sales exceeding 720 billion yuan. Retail sales of consumer goods, a key barometer of economic strength, rose 4.6 percent year-on-year in January-March, with the figure in March recording the strongest single-month growth since 2024.