BEIJING: China signalled on Thursday (Dec 11) it will rely on fiscal stimulus to manage the economy in 2026, pledging to maintain a “necessary” budget deficit and debt levels to shore up growth while tackling local government financial strains.
The commitment, outlined after a key agenda-setting meeting, underscores Beijing’s intent to keep spending high and deploy flexible monetary tools as it faces pressure to boost domestic demand and offset global trade tensions.
China will increase counter-cyclical and cross-cyclical adjustments next year, the official Xinhua news agency reported, citing the annual Central Economic Work Conference held on Dec 10 to Dec 11.
“We will continue to implement a more proactive fiscal policy: Maintain necessary fiscal deficit, total debt scale, and total expenditure, strengthen scientific fiscal management, optimise fiscal expenditure structure,” it said.
China is widely expected to roll out stronger fiscal stimulus next year, keeping its budget deficit target near current levels – or raising it slightly – alongside increased debt issuance, analysts said.
China set a record budget deficit target of about 4 per cent of GDP this year to support its growth goal.
Policymakers will flexibly deploy tools, including cuts to banks’ reserve requirement ratios and interest rates, the Xinhua report said.
Source: CNA
