Revenue Growth Modest, Expenditure Front-loaded - Fiscal Operations Off to Stable Start in First Two Months

Securities Times Reporter He Jueyuan

On March 19, the Ministry of Finance announced the fiscal revenue and expenditure for January–February 2026. The data shows that the national general public budget revenue reached 4.42 trillion yuan, a year-on-year increase of 0.7%; the total expenditure was 4.67 trillion yuan, up 3.6% year-on-year. Overall, fiscal revenue saw a slight increase since the beginning of the year, with expenditures accelerating and progressing faster, marking a steady start to fiscal operations.

In January–February this year, the national general public budget revenue grew by 0.7% year-on-year, with tax revenue increasing by 0.1% and non-tax revenue rising by 3.4%. Since the beginning of the year, the performance of major tax categories has been mixed. In the first two months, domestic value-added tax (VAT) increased by 4.7% year-on-year, while domestic consumption tax, corporate income tax, and personal income tax decreased by 6.2%, 3.9%, and 6.9%, respectively.

Current major taxes such as VAT and corporate income tax are levied at current prices, closely tied to product prices and profits. An official from the Ministry of Finance pointed out that the growth of domestic VAT was mainly driven by the growth of industrial service industries and the narrowing decline in industrial producer prices; the decline in corporate income tax was primarily due to some pre-paid income tax from last year’s tax settlement being recorded earlier, raising the base.

Personal income tax was also affected by the Spring Festival holiday and base effects. The reporter learned that personal income tax in the first two months decreased mainly because last year’s Spring Festival was earlier, with year-end bonuses and dividends paid out earlier, leading to earlier tax collection and a higher base. This year’s Spring Festival was in mid to late February, so related taxes will be collected later, causing a significant rebound in personal income tax in March.

Economic performance determines tax revenue. In the first two months, China’s foreign trade import and export data exceeded expectations, which is reflected in related tax revenues—import VAT and consumption tax increased by 12.9% year-on-year; export VAT and consumption tax increased by 9.7%; stamp duty on securities transactions reached 49.9 billion yuan, more than doubling (up 110%), indicating active stock market trading and continuous growth in transaction volume since the beginning of the year.

Analyzing tax revenue by industry, sectors such as equipment manufacturing and modern services continued to perform well. Among them, tax revenue from computer and communication equipment manufacturing grew by 9%, electrical machinery and equipment manufacturing by 9.5%, scientific research and technical services by 15.8%, and cultural, sports, and entertainment industries by 9.8%.

Since the beginning of the year, the national general public budget expenditure has advanced, increasing by 3.6% year-on-year. Various levels of fiscal departments have coordinated the use of funds to promote a reasonable acceleration of expenditure, ensuring key areas such as “three guarantees” at the grassroots level. Looking at major expenditure categories, social security and employment, health and wellness, housing security, urban and rural community development, and energy conservation and environmental protection expenditures increased by 8.6%, 17.3%, 9%, 7.7%, and 5.4%, respectively.

In recent years, the proportion of healthcare, education, social security, employment, and housing security expenditures in the national general public budget has continued to rise. Luo Zhiheng, Chief Economist of Kaiyuan Securities and Director of the Research Institute, pointed out that the future direction of optimizing fiscal expenditure structure is to shift from a focus on investment to a balanced emphasis on investment and consumption, from supply-side focus to a combination of supply and demand, and from prioritizing enterprises to balancing support for households and residents, further tilting toward residents and livelihood security.

While ensuring strong support for key areas, the issuance pace of various government bonds has been accelerated. In January–February, the expenditure from the national government fund budget increased by 16% year-on-year, reflecting an accelerated use of bond funds at all levels at the beginning of the year. During the same period, the issuance scale of national and local government bonds increased by 12.2% and 8.5% year-on-year, respectively, strongly supporting the growth of social financing.

Wang Feng, Associate Professor at the China Public Finance Research Institute of Shanghai University of Finance and Economics, told Securities Times that 2026 may continue last year’s overall approach of “debt restructuring first, then reinvestment.” The 2 trillion yuan of bond swaps may continue to be concentrated in the first and second quarters. Additionally, the new special bonds used for debt relief and debt repayment are expected to be issued earlier, with project construction bonds accelerating significantly in the second quarter. Furthermore, ultra-long-term special national bonds may continue to be launched in the second quarter, running parallel with special bonds.

(Edited by: Wang Zhiqiang HF013)

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