by XIN Yuan

China set its fiscal deficit ratio at around 4% of GDP this year, according to the government work report delivered by Premier Li Qiang to the National People's Congress, signaling continued fiscal support as policymakers seek to stabilize growth.

The report said the budget deficit will reach 5.89 trillion yuan (about $853 billion), 230 billion yuan higher than last year, while general budget spending will exceed 30 trillion yuan for the first time, rising by about 1.27 trillion yuan year on year. Beijing also plans to issue 1.3 trillion yuan of ultra-long special treasury bonds to support major infrastructure projects and equipment upgrades.

Analysts said maintaining the "around 4%" deficit ratio while increasing the overall deficit reflects a measured fiscal approach. YANG Chang, chief policy analyst at Zhongtai Securities Institute, said the target helps keep the central government's leverage broadly stable while leaving room for additional stimulus if economic conditions weaken. As China's economic base expands, the unchanged ratio still results in a larger deficit, providing incremental fiscal support.

The issuance of ultra-long special treasury bonds also allows policymakers to expand fiscal support beyond the headline deficit ratio, effectively widening the broader fiscal deficit while keeping the official figure relatively stable, Yang added.

Economists say stronger fiscal policy will play a key role this year as China seeks a solid start to its new five-year plan. WEN Bin, chief economist at China Minsheng Bank, said China may need to step up counter-cyclical policy support amid rising uncertainties in the domestic and global economy.

Some analysts expect fiscal spending to play a larger role than monetary policy in supporting growth. YUAN Haixia, head of the research institute at China Chengxin International Credit Rating, said fiscal policy tends to have a faster impact when domestic demand is weak and will help fund major projects early in the new planning cycle.

Brokerage Huatai Securities said fiscal support is likely to focus on both infrastructure investment and "investment in people", including measures to boost consumption, while also supporting service-sector upgrades, key industrial supply chains and AI-related initiatives.