Ministry of Finance: Will Continue to Implement a More Proactive Fiscal Policy This Year

On March 17, the Ministry of Finance released the 2025 China Fiscal Policy Implementation Report (hereinafter referred to as the “Report”), which shows that over the past year, fiscal operations remained stable and orderly. Fiscal departments at all levels strengthened resource coordination, maintained necessary expenditure levels, and ensured key areas of spending were well protected.

The Ministry of Finance stated that 2026 marks the beginning of the “14th Five-Year Plan” period. It will continue to implement more proactive fiscal policies in five areas, including expanding the fiscal expenditure scope to ensure necessary spending; optimizing the government bond portfolio to better leverage bond benefits; improving the efficiency of transfer payments to enhance local autonomous financial capacity; continuously optimizing the expenditure structure to strengthen support for key areas; and enhancing fiscal and financial coordination to amplify policy effectiveness, thereby better stimulating the vitality of micro-entities through macro policies.

Specifically, to support the development of a strong domestic market, the Ministry clarified that it will continue to allocate ultra-long-term special bonds for “dual” construction and “two new” initiatives, and optimize policy implementation. It will implement a package of fiscal and financial policies to promote domestic demand, focusing on stimulating private investment and promoting resident consumption, supporting reductions in corporate financing costs, increasing residents’ spending capacity, and expanding high-quality service supply. Additionally, it will improve the management of the “negative list” for special bond investment areas and guide relevant localities to carry out pilot projects for “self-review and spontaneous” work. The construction of a unified national market will be advanced in depth, with standardized tax incentives and fiscal subsidy policies.

Support for cultivating and expanding new drivers of growth remains a key focus this year. The report also outlined specific directions, including rolling out high-quality development actions for key manufacturing industry chains; organizing the third batch of pilot cities for new technological transformation in manufacturing; using a comprehensive set of tools such as special funds, government investment funds, and financing guarantees to support the development of high-tech enterprises and tech-based small and medium-sized enterprises; and continuing the fiscal subsidy policies for specialized, refined, distinctive, and innovative SMEs. Efforts will also be made to deepen pilot projects for digital transformation of small and medium-sized enterprises in cities.

According to the report, in 2025, the national general public budget spent 1,206.2 billion yuan on science and technology, an increase of 4.8% compared to 2024. The focus will be on optimizing the structure of science and technology investments, with a greater emphasis on enhancing original innovation capabilities. In 2025, central government basic research expenditure will grow by 9.6% over 2024. The Ministry of Finance stated that support for high-level scientific and technological independence and self-reliance will continue to accelerate in 2026. Specific measures include increasing investment, improving diversified innovation funding mechanisms, mobilizing more social capital and financial resources into technological innovation, optimizing the structure of science and technology spending, and further focusing on basic research, applied basic research, and national strategic technological tasks to stimulate innovation vitality.

Ensuring and improving people’s livelihoods remains a top priority for fiscal work across regions this year. The report proposed further increasing fiscal investment in education, implementing and gradually promoting free preschool education policies, and ensuring the implementation of student financial aid policies. It also emphasized strengthening employment support, stabilizing and expanding employment for key groups, and improving the social security system, including increasing basic pensions for urban and rural residents.