China will intensify its fiscal policy over the next five years, Finance Minister Lan Foan said on Saturday in an interview with Xinhua News Agency, signaling a more proactive approach to supporting economic stability, domestic demand, and social development amid a volatile global environment.

Lan highlighted plans to strengthen both counter-cyclical and cross-cyclical regulation, adjusting the deficit-to-GDP ratio and the scale of government borrowing to respond to evolving economic conditions.

“We will adjust the deficit-to-GDP ratio and the scale of government borrowing to suit evolving conditions,” he said, reflecting a flexible approach designed to stabilize growth through fiscal measures.

The minister outlined the full range of fiscal tools China intends to use, including budgetary allocations, taxation, government bonds, and transfer payments, aimed at sustaining both economic and social development. These tools, Lan said, will help ensure fiscal policy contributes meaningfully to economic growth while addressing the social needs of citizens.

Acknowledging global challenges, Lan described the international environment as “volatile and unstable” and noted that competition among major economies is “becoming more intricate and intense,” without referencing specific countries or China’s ongoing trade disputes with the United States.

Domestically, the government plans to focus fiscal support on strategic sectors, including the modern industrial system, science and technology, education, and social security. Fiscal subsidies will also be deployed to stimulate the consumption of goods and services, signaling a clear policy shift toward boosting domestic demand as a driver of growth.

Lan also emphasized coordinated use of local government special-purpose bonds and ultra-long special treasury bonds, while optimizing the allocation of government investment. He said government spending will be targeted for efficiency and effectiveness, promoting both immediate economic activity and longer-term structural improvements.

Shift in Fiscal Priorities Compared to the Previous Five-Year Plans

China’s fiscal approach in the next five years marks a notable shift from earlier five-year plans. Historically, China’s fiscal policy was heavily focused on infrastructure investment and export-oriented growth, emphasizing large-scale construction projects and industrial expansion. While these measures supported rapid GDP growth, they also contributed to rising local government debt and overcapacity in certain sectors.

In contrast, Lan’s remarks indicate a pivot toward a more diversified and innovation-driven fiscal strategy. The emphasis on science and technology, modern industrial systems, and social security reflects lessons learned from previous cycles, where overreliance on infrastructure and exports left the economy vulnerable to external shocks. Additionally, fiscal support for domestic consumption and targeted subsidies highlights a move toward rebalancing growth, addressing inequality, and strengthening social welfare.

This proactive fiscal stance also indicates an effort to integrate government investment with strategic industrial policy, using tools such as special-purpose and ultra-long treasury bonds to direct resources efficiently. Compared with prior plans, there is a stronger focus on coordinated, evidence-based allocation of public funds, aiming to enhance both short-term economic resilience and long-term structural competitiveness.

The upcoming five-year fiscal strategy signals that Beijing intends to maintain a proactive, flexible approach to economic management, balancing immediate stimulus with long-term structural reforms. It is prioritizing innovation, social security, and domestic consumption alongside traditional investment channels, with the aim of sustaining growth momentum.