China – July 27, 2025
China’s fiscal expenditure grew 3.4% year-on-year in the first half of 2025, reaching nearly 14.13 trillion yuan (about $1.98 trillion USD). Data released by the Ministry of Finance on Friday shows the government continues to increase spending in key sectors, even as overall fiscal revenue saw a slight dip.
This increase highlights Beijing’s ongoing efforts to boost economic growth and tackle domestic priorities amidst a complex global economic landscape. While total expenditure saw a modest rise, significant growth was seen in areas directly impacting public welfare and strategic development.According to the Ministry of Finance, spending on social security and employment jumped a robust 9.2% year-on-year between January and June.
This shows the government’s commitment to strengthening its social safety nets and supporting job initiatives. Additionally, fiscal expenditure on science and technology rose 9.1%, reflecting China’s focus on innovation and technological advancement. The education and health sectors also saw considerable growth, with expenditures expanding 5.9% and 4.3% respectively.
However, this expenditure growth comes as overall fiscal revenue slightly declined. China’s fiscal revenue edged down 0.3% year-on-year to around 11.56 trillion yuan in the first half of the year. This dip was primarily due to a 2.8% decrease in central government fiscal revenue, though local governments managed to increase their collections by 1.6%. Tax revenue specifically fell 1.2% in the same period.
This gap between rising expenditure and slightly falling revenue resulted in a fiscal deficit of 2.57 trillion yuan for the first six months, though this figure might change by year-end. Analysts note that China has set a full-year budget deficit target of 5.66 trillion yuan, or 4% of its Gross Domestic Product (GDP).Economic Resilience Amidst Fiscal ChallengesDespite the challenges on the revenue side, China’s economy showed resilience in the first half of 2025, with GDP expanding 5.3% year-on-year, surpassing the annual target of “around 5%.”
This growth was partly due to domestic stimulus programs and strong export performance.The continued fiscal expenditure, especially in social welfare and strategic industries, is seen as crucial for China to maintain economic stability and foster long-term development. This is happening even as policymakers navigate the complexities of managing both growth and fiscal sustainability.
The government has indicated a more “proactive stance” in its fiscal policy for the second half of the year, focusing on precise and sustainable spending.
