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 released data on fiscal revenue and expenditure operations for January–February 2026. It shows that in the first two months of this year, national general public budget revenue reached 4.42 trillion yuan, up 0.7%; national general public budget expenditure was 4.67 trillion yuan, up 3.6%. Overall, since the start of the year, fiscal revenue has grown slightly, with expenditure stepping up early and progress accelerating, and fiscal operations have achieved a steady start.

In January–February this year, national general public budget revenue increased by 0.7% year over year. Of this, tax revenue increased by 0.1% year over year, and non-tax revenue increased by 3.4% year over year. Since the start of the year, revenue from major tax categories has shown differentiation. In the first two months, domestic value-added tax rose 4.7% year over year, while domestic consumption tax, corporate income tax, and individual income tax fell by 6.2%, 3.9%, and 6.9%, respectively.

The current value-added tax, corporate income tax, and other major tax categories are all collected at prevailing prices, which means they are highly linked to companies’ product prices and profits. A relevant official of the Ministry of Finance pointed out that the growth in domestic value-added tax is mainly driven by increases in industrial services and a narrowing in the decline in factory-gate prices of industrial producers. The fall in corporate income tax is mainly because, in the same period last year, some corporate income tax from tax settlement and reconciliation was remitted to the treasury earlier, thereby raising the base.

Individual income tax is also affected by the Spring Festival holiday factor and the base effect. The reporter learned that in the first two months of this year, individual income tax declined mainly because last year’s Spring Festival fell earlier; personal income tax related to the earlier remittance of individual income tax paid on year-end bonuses and dividends was received earlier, raising the base. This year’s Spring Festival is in the middle-to-late period of February, so the related taxes will be deferred for remittance, and correspondingly drive a clear rebound in the year-on-year growth of individual income tax in March.

Economic performance determines tax revenue. In the first two months of this year, China’s foreign trade import and export data grew beyond expectations, and related tax revenues also reflected this—imported goods’ value-added tax and consumption tax increased 12.9% year over year; value-added tax and consumption tax on exported goods increased 9.7% year over year; securities transaction stamp duty was 49.9 billion yuan, up 1.1 times, reflecting that since the beginning of the year, China’s stock market trading has remained active and trading volumes have continued to grow.

When observing tax revenue by industry, industries such as equipment manufacturing and modern services continue to perform well. Among them, tax revenue in computer and communications equipment manufacturing grew by 9%; tax revenue in electrical machinery and equipment manufacturing grew by 9.5%; tax revenue in scientific research and technology services grew by 15.8%; and tax revenue in culture, sports, and entertainment grew by 9.8%.

Since the start of the year, national general public budget expenditure has been stepped up early, up 3.6%. Government departments at all levels have coordinated and made overall use of various funds to promote a reasonable acceleration in expenditure progress, and key expenditures such as “three guarantees” at the grassroots level have been well ensured. Judging from major expenditure categories, in the first two months of this year, social security and employment spending, health spending, housing security spending, urban and rural community spending, and energy conservation and environmental protection spending increased by 8.6%, 17.3%, 9.0%, 7.7%, and 5.4% year over year, respectively.

In recent years, the share of general public budget spending on medical care, education, social security and employment, and housing security has continued to rise. Luo Zhiheng, Chief Economist and Director of the Research Institute at Yuekai Securities, pointed out that the general direction for optimizing the fiscal expenditure structure in the future is to shift from focusing on investment to giving equal weight to investment and consumption; from emphasizing supply to aligning supply with demand; and from focusing on enterprises to focusing on enterprises and households, further tilting toward the household end and livelihood security.

While support for expenditures in key areas has been strong, the issuance timetable of various government bonds has also been moved up further. In January–February, expenditure under the budget for government-managed funds increased 16% year over year, showing that finance departments at all levels accelerated the use of bond funds at the beginning of the year. In the first two months of this year, the issuance scale of national government bonds and local government bonds increased by 12.2% and 8.5% year over year, respectively, strongly supporting the scale of social financing.

Wang Feng, an associate professor at the Institute of China Public Finance, Shanghai University of Finance and Economics, previously said in an interview with Securities Times that in 2026, the overall approach of “defusing debt risk first, then investing” from last year may continue. The 2 trillion yuan swap bonds may continue to be issued in a concentrated manner in the first and second quarters. Among newly added special-purpose bonds, the portion used to resolve debt and clear arrears will be issued earlier; the portion used for project construction will noticeably speed up in the second quarter. In addition, China’s 2026 ultra-long-term special treasury bonds may also begin issuing in the second quarter, working in parallel with special-purpose bonds to increase efforts.

(Editor: Wang Zhiqiang HF013)

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