After the central economic work conference, analysts said the fiscal deficit ratio is likely to stay at this year’s record 4 per cent in line with ‘targeted’ spending. Officials called for maintaining a “necessary deficit size, total debt and expenditure volume” in a statement issued after the annual meeting ended on Tuesday. The December gathering typically sets the broad agenda for economic work in the coming year.
The central economic work conference ended on Tuesday, with a statement calling for maintaining a “necessary deficit size, total debt and expenditure volume”. This annual meeting of high-level policymakers typically sets the broad agenda for economic work in the coming year.
Lian Ping, director general of the China Chief Economists Forum, said in a note published on Friday: “The deficit ratio may be set at between 4 and 4.2 per cent, and the deficit total may increase from 5.66 trillion yuan (US$801.5 billion) in 2025 to 6 to 6.25 trillion yuan in 2026, an increase of nearly 600 billion yuan.” He added: “Overall GDP growth, which may reach 148.7 trillion yuan in 2026, has made bigger deficits possible, which will in turn provide a stable source of funds for expenditure and underpin expenditure increase from 2025’s base.”
Raymond Yeung, chief economist for Greater China at ANZ, said along with the possible 4 per cent ratio target, the broad fiscal deficit is expected to reach 9 to 10 per cent of GDP in 2026, but stressed the most relevant feature would not be its size. “The key is the imperative to ‘optimise the structure of fiscal expenditure’ mentioned in the readout. So Beijing is expected to place greater emphasis on the effectiveness and targeted nature of its policies – balancing whether funds will be used for areas such as debt resolution, infrastructure, technology or consumption,” Yeung said.
This policy direction reflects Beijing's focus on spending efficiency and targeting amid economic recovery efforts to support sustainable growth.
