China's fiscal spending falls 6.7% in August, deficit narrows

September 18, 2026 at 03:43 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

China's broad budget spending fell 6.7% in August from a year earlier, accelerating from July's 4.4% drop, according to Bloomberg calculations based on Ministry of Finance data. The fiscal deficit shrank by a fifth in August, bringing the first eight months' shortfall to 5.5 trillion yuan ($821 billion). The pullback coincided with weak domestic demand, as consumption growth nearly stalled and investment continued to slump.

Key Facts

Broad budget spending fell 6.7% in August from a year earlier, compared with a 4.4% drop in July.
The fiscal deficit shrank by a fifth in August, bringing the January-August shortfall to 5.5 trillion yuan ($821 billion).
Broad revenue rose 2.9% in August from a year earlier.
State-owned policy banks began deploying funding from an 800 billion yuan program mainly for infrastructure projects in 2026.
Unsold government bonds for the rest of the year equal about 1.1% of China's GDP, according to CICC chief economist Miao Yanliang.

Fiscal Pullback

China's broad budget spending fell 6.7% in August from a year earlier, accelerating from July's 4.4% decline, according to Bloomberg calculations based on Ministry of Finance data released on Friday. Broad revenue rose 2.9% in August, while the fiscal deficit shrank by a fifth, bringing the first eight months' shortfall to 5.5 trillion yuan ($821 billion). The deepening pullback in government spending partly explains the persistence of weak domestic demand in August, when consumption growth almost ground to a halt and investment continued to slump.

Policy Response

Policymakers are likely keeping a close eye on how the economy fares in the next few weeks as they assess whether additional stimulus is needed to achieve their annual growth target of 4.5%-5%. Officials have so far focused on the faster use of existing budget allocations instead of rolling out fresh supportive measures. State-owned policy banks started deploying funding from a program that can unlock 800 billion yuan, mainly for infrastructure projects in 2026. Government bonds slated to be issued during the rest of this year but still unsold were equivalent to around 1.1% of China's gross domestic product, according to estimates by Miao Yanliang, chief economist at China International Capital Corp. Authorities should be able to meet this year's growth target with spending financed by the borrowing, he said earlier this week.