China's Ministry of Finance (MOF) has pledged to implement a more proactive fiscal policy in a forceful and effective manner, stepping up counter-cyclical adjustment and expanding domestic demand, according to a report on the implementation of China's fiscal policy in the first half of 2026 that was released on Friday.

Facing an increasingly complex situation and interwoven risks, the ministry will fully leverage existing policies while promptly rolling out practical and effective incremental measures based on macroeconomic conditions, the report said. The aim is to expand domestic demand, optimize supply, and improve people's livelihoods, providing strong support for a sound start to the 15th Five-Year Plan period (2026-2030).

The report noted that China's economy pressed ahead resiliently in the first half of the year, laying a solid foundation for stable fiscal operations, with expenditures front-loaded and key areas well supported.

The MOF outlined six priorities going forward. It will accelerate the allocation and use of fiscal funds and government bond issuance so that more physical workload is formed and tangible progress is achieved as soon as possible. Special treasury bonds will be issued to inject capital into eight central financial enterprises, strengthening their ability to serve the real economy.

To expand domestic demand on all fronts, the ministry will advance major national projects and security capacity building in key areas, along with large-scale equipment renewal and consumer goods trade-in programs. A fiscal-financial coordination policy package will be optimized to better encourage household consumption and leverage private investment, while ultra-long-term special treasury bonds and local government special bonds will focus on new quality productive forces and new urbanization. Other priorities include promoting sci-tech and industrial innovation, improving livelihoods, defusing risks in key areas, and deepening fiscal management reform. 

The MOF added that incremental policies will be introduced in a timely manner as conditions evolve.

The effects of this year's measures are already visible. Trade-in funds of 187.5 billion yuan ($26.4 billion) have driven around 1.32 trillion yuan in sales, benefiting 178 million person-times. The fiscal-financial coordination package, backed by 100 billion yuan in central funds, has benefited about 113 million resident person-times and some 6.22 million enterprises, mostly micro, small and medium-sized businesses. 

All 800 billion yuan of bond funds for major projects has been allocated to 1,417 projects, and 2.4 trillion yuan of new local special bonds had been issued by the end of July, backing over 18,000 projects.

The measures have been welcomed by commentators. Stronger counter-cyclical adjustment and the optimized policy package are crucial for stabilizing fourth-quarter growth, said Yao Dongmin, a professor at the Central University of Finance and Economics.