JPMorgan: China: Fiscal Year Start: Weak Revenue, Decent Expenditure

JPMorgan assesses China's early 2026 fiscal position, noting that while general public budget revenue grew modestly, government fund revenue contracted sharply due to declining land sales. Expenditure accelerated, with infrastructure spending reversing its prior contraction trend and growing 2.4% year-on-year, aligning with a rebound in fixed-asset investment. Social spending increased 5.2%. Government fund revenue plunged 16% annually as land sale revenue dropped 25.2%, although related spending surged 16% due to special bond issuance. The National People's Congress approved bond quotas slightly below expectations. Ultra-long special sovereign bonds totaled RMB 1.3 trillion, below the anticipated RMB 1.5 trillion, while local special bonds reached RMB 4.4 trillion versus an expected RMB 4.5 trillion. However, expansions in policy bank tools to RMB 800 billion provided a partial offset. Trade-in subsidies of RMB 250 billion disappointed relative to the RMB 400 billion forecast, but the newly established RMB 100 billion financial fund for consumer and service loan interest subsidies marks a positive development. Consequently, JPMorgan lowered its augmented deficit ratio estimate to 11.0% of GDP and trimmed the fiscal impulse to 0.3 percentage points. Overall fiscal policy remains supportive but constrained in expansionary scope.