China pulled back on fiscal spending in March even as the economy opened 2026 stronger than expected, leaving policymakers with less urgency to add stimulus beyond what is already in the budget. A broad measure of public expenditure fell 2.5 percent from a year earlier, its steepest drop since October, while revenue rose 3.4 percent, according to Ministry of Finance data compiled by Bloomberg calculations.
The latest budget numbers point to a government trying to do less, but more selectively. China’s general public budget revenue rose 2.4 percent in the first quarter to 6.16 trillion yuan, a three-year high for the period, while expenditure reached 7.47 trillion yuan, up 2.6 percent, its fastest first-quarter pace in five years, the finance ministry said.
That split matters because the rebound has given Beijing room to lean on targeted tools instead of broad-based spending. Infrastructure outlays under the main budget fell 8.5 percent in March, and officials have kept the 2026 government bond quota little changed while lifting policy-financing tools by 60 percent to 800 billion yuan, a sign they are trying to support investment without reopening the debt spigot.
For now, that balance is under strain from the property slump and the war in Iran. Local land-sale income still dropped 24.4 percent in the first quarter, and higher oil prices could complicate any stimulus plan if the Strait of Hormuz risk persists, even as policymakers say they have room to “adjust or optimize” measures if conditions worsen.
