China's fiscal expenditure grew a modest 1.2% year-on-year in the January-August period, a slight decrease from the 1.3% increase recorded in the first seven months of the year. This follows a significant 11.9% plunge in a broad measure of government spending in June, the largest drop since October, as calculated from Ministry of Finance data.
The country's fiscal revenue saw a 5.7% rise in the first eight months of 2026 compared to the previous year. This is a marginal slowdown from the 5.8% growth observed in the January-July period, as reported by the finance ministry. The continuous fiscal tightening comes amidst a broader economic slowdown, with industrial output and retail sales missing forecasts in recent months.
Despite the austerity measures, Vice Finance Minister Liao Min announced in August that authorities were preparing new fiscal-financial support measures to be rolled out in the second half of this year. These measures are intended to boost borrowing by businesses and consumers, as the economy struggles with lackluster domestic demand and disruptions from extreme weather, causing its growth to fall below the government's annual target. Retail sales in August, for instance, rose only 0.4% year-on-year, below the consensus forecast of 0.8% and down from 0.6% in July.
