Slight increase in revenue, proactive expenditure; a stable start to fiscal operations in the first two months

Securities Times reporter He Jueyuan

On March 19, the Ministry of Finance announced the fiscal revenue and expenditure operation for January to February 2026, showing that in the first two months of this year, the national general public budget revenue reached 4.42 trillion yuan, a year-on-year increase of 0.7%; the national general public budget expenditure was 4.67 trillion yuan, a year-on-year increase of 3.6%. Overall, fiscal revenue has seen slight growth since the beginning of the year, with expenditure ramping up and accelerating, resulting in a stable start to fiscal operations.

In January to February this year, national general public budget revenue increased by 0.7% year-on-year, of which tax revenue grew by 0.1% year-on-year, while non-tax revenue increased by 3.4% year-on-year. Since the start of the year, the performance of major tax revenues has shown differentiation. In the first two months of this year, domestic value-added tax grew by 4.7% year-on-year, while domestic consumption tax, corporate income tax, and individual income tax decreased by 6.2%, 3.9%, and 6.9% year-on-year, respectively.

Current major taxes such as value-added tax and corporate income tax are levied at current prices, highly tied to product prices and profits of enterprises. A responsible person from the Ministry of Finance pointed out that the growth in domestic value-added tax is mainly driven by the growth in industrial and service sectors and the narrowing decline in the ex-factory prices of industrial producers; the decrease in corporate income tax is mainly due to the fact that last year, some reconciled corporate income taxes were collected early, raising the base.

Individual income tax is also influenced by the Spring Festival holiday and base effects. According to reporters, the decrease in individual income tax in the first two months of this year is mainly because the Spring Festival last year was earlier, leading to an early collection of individual income tax from year-end bonuses, raising the base, while this year’s Spring Festival is in mid to late February, causing the related tax revenue to be deferred, which is expected to significantly boost the growth of individual income tax in March.

Economic operations determine tax revenue. In the first two months of this year, China’s foreign trade import and export data exceeded expectations, and related tax revenue also reflected this—imported goods value-added tax and consumption tax increased by 12.9% year-on-year; exported goods refunded value-added tax and consumption tax increased by 9.7% year-on-year; securities transaction stamp tax was 49.9 billion yuan, a year-on-year increase of 1.1 times, reflecting that the stock market transactions in China have remained active and trading volume has continued to grow since the beginning of the year.

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

Since the beginning of the year, national general public budget expenditure has ramped up, increasing by 3.6% year-on-year. Financial departments at all levels have effectively coordinated the use of various funds, promoting reasonable acceleration of expenditure progress, ensuring that key expenditures such as the “three guarantees” at the grassroots level are well protected. From the major expenditure items, in the first two months of this year, expenditures on social security and employment, health care, housing security, urban and rural community expenditures, and energy conservation and environmental protection increased year-on-year by 8.6%, 17.3%, 9%, 7.7%, and 5.4%, respectively.

In recent years, the proportion of expenditures on medical care, education, social security and employment, and housing security in the national general public budget has continued to increase. Luo Zhiheng, chief economist and director of the research institute at Yuekai Securities, pointed out that the future direction of optimizing the fiscal expenditure structure is shifting from emphasizing investment to balancing investment and consumption, from focusing on supply to balancing supply and demand, and from emphasizing enterprises to balancing enterprises and households, further tilting towards residents and livelihood protection.

While ensuring strong support for key area expenditures, the issuance pace of various government bonds has been further advanced. In January to February this year, national government fund budget expenditures increased by 16% year-on-year, indicating that financial authorities at all levels are accelerating the use of bond funds at the beginning of the year. In the first two months of this year, the issuance scale of national bonds and local government bonds increased year-on-year by 12.2% and 8.5%, respectively, robustly supporting the scale of social financing.

Wang Feng, an associate professor at the Chinese Public Finance Research Institute of Shanghai University of Finance and Economics, stated in an interview with Securities reporters that 2026 may continue the overall idea of “first resolving debt, then investing” from last year. 2 trillion yuan of replacement bonds may continue to be concentrated in issuance during the first and second quarters. At the same time, the portion of new special bonds used for debt resolution will be issued earlier, while the portion used for project construction will significantly accelerate in the second quarter. In addition, super long-term special national bonds may continue to be initiated in the second quarter, working in parallel with special bonds.

(Editors: Wang Zhiqiang HF013)

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