China steps up fiscal support as growth weakens, domestic demand falters

China is doubling down on a targeted programme that's tapping fiscal resources to drive borrowing by businesses and consumers, with new measures set for launch in the rest of the year as economic growth veers below the government's annual target.

"We've been studying and drafting new coordinated fiscal and financial policies that will be introduced in the second half of this year," vice finance minister Liao Min said at a briefing in Beijing on Friday.

The announcement marks the latest attempt by the government to provide fiscal support for the economy during one of its weakest stretches in years. It also underscores the focus by the authorities on acting carefully to revive domestic demand and expand private spending against the backdrop of mounting fiscal strains at the local level.


In his remarks, Liao was referring to the programme introduced earlier this year that provided perks, including discounted lending backed by fiscal subsidies to companies and consumers, alongside loan guarantees to spur private investment.

The creation of the programme is "one of the key pillars of this year's more proactive fiscal policy," Liao said, adding the authorities will in the future make such fiscal and financial coordination a regular feature of their approach.

When unveiled in January, the subsidy incentives for households and companies were backed with 100 billion yuan ($15 billion) from the central budget. The effort has been expanded since August 1 to make more types of loans eligible for the interest rate subsidies meant for small and micro businesses and consumers. The package supported more than 20 trillion yuan in new lending during the first seven months of the year, an increase of 4.5% from 2025.

Government data published earlier in the week showed China's industrial output, consumption and investment all softened more than expected in July.

Pressure on policymakers to step up stimulus is on the rise, given many economists estimate gross domestic product growth has slipped further below Beijing's annual target of 4.5%-5% after reaching only 4.3% in the second quarter.

Still, Liao suggested the Chinese government's bond quota already planned for this year is sufficient to ensure it will maintain "fiscal spending intensity," noting there is more than 2 trillion yuan in the allowance available in the coming months.

The ministry of finance will guide local governments to issue the bonds, accelerate fiscal spending and strengthen oversight of regions whose pace of expenditure has been slow, he said.