Sharper focus on expanding demand seen

China is expected to step up the efficiency of its proactive fiscal policy next year, sharpening its focus on expanding domestic demand and strengthening long-term innovation capacity — priorities experts say will anchor China's economic strategy for the 15th Five-Year Plan (2026-30).

In a recent signed article published in People's Daily, Finance Minister Lan Fo'an said fiscal authorities will "comprehensively expand domestic demand" and "support high-level technological self-reliance and self-strengthening", adding that active fiscal policy must be carried out "with greater strength and higher efficiency" to underpin the next stage of Chinese modernization.

Analysts said Lan's piece offers one of the clearest signals of the priorities likely to be set during the upcoming annual Central Economic Work Conference.

Lan wrote that fiscal measures will play a central role in unlocking consumption potential and increasing household income through tax, social security and transfer-payment measures, while cultivating new areas of consumer demand. He called for broader use of fiscal subsidies and interest-rate incentives to build new consumption scenarios, alongside special-purpose bonds and ultra-long term special treasury bonds for long-term structural investment.

The minister underscored that public finance must remain "people-centered" and that more resources should be invested "in people and for people" by combining physical and social infrastructure to sustain long-term demand.

This shift represents "a profound adjustment", said Qiao Baoyun, a professor at the China Academy of Public Finance and Policy at the Central University of Finance and Economics. "The article highlights a greater tilt of fiscal resources toward people and social welfare. It stresses that people are the goal and materials are the means."

Experts expect the upcoming conference to outline more concrete steps to stabilize consumption and investment. Tian Lihui, university chair professor of finance at Nankai University, said domestic demand expansion and technological self-reliance will form "two wings of the same logic chain", supported by a more proactive fiscal stance and moderately accommodative monetary policy.

"The policy approach combines 'more active fiscal policy' with 'moderately accommodative monetary policy', while introducing a consistency assessment across macro policies, bringing economic and noneconomic policies into a unified framework to enhance the foresight, precision and effectiveness of countercyclical measures. It forms a policy 'combo punch' that helps hedge against external uncertainties and strengthens institutional support for improving total factor productivity," Tian said.

He added that coordinated measures, from income boosting for middle- and low-income groups to diversified consumption scenarios and equipment-upgrade initiatives, will help generate tangible progress and attract more private capital.

Lan also called for stronger fiscal support for basic and applied research, national strategic science and technology tasks, and breakthroughs in key core technologies. Tools such as tax incentives, government procurement and investment funds will help upgrade traditional industries, nurture emerging and future industries, and promote deeper integration of technological and industrial innovation.

Tian said the innovation push will evolve toward ecosystem building, with mechanisms such as "open competition for selecting leading teams" and "horse racing "parallel competition initiatives playing a larger role in frontier fields including artificial intelligence and biomedicine.

One example is the recent financing by METiS TechBio, an AI-driven nanodelivery company, which secured funds from Beijing-based healthcare investment institutions to support platform building and technology translation, illustrating how fiscal and industrial policies jointly strengthen innovation capacity.

International observers also expect China to maintain a supportive fiscal environment while managing risks. Alex Muscatelli, director of sovereign economics at Fitch Ratings, said China's fiscal stimulus was ramped up in the first half, not only through consumer-support measures such as trade-in programs, but also through infrastructure spending.