As global markets brace for prolonged volatility, China is turning decisively to fiscal policy as a counter-cyclical tool—on an unprecedented scale. In the first half of 2025, the country issued a record ¥7.88 trillion ($1.1 trillion) in government bonds, a 35.3% increase year-on-year, according to the Ministry of Finance. The average issuing rate dropped to just 1.52%, down 43 basis points from 2024, signaling ample domestic liquidity and investor confidence.

Among these, ¥555 billion ($77.4 billion) were ultra-long-term special treasury bonds—18% higher than last year's pace. These bonds, part of a planned ¥1.3 trillion issuance, are targeted at funding large-scale infrastructure renewal, industrial upgrading, and consumer subsidies.

“We’re seeing a more proactive and precision-oriented fiscal stance,” said Tang Longsheng, Deputy Director at the Treasury Payment Center. “The goal is not short-term stimulus, but long-term productivity.”

This fiscal pivot marks a notable departure from China’s past reliance on real estate and heavy infrastructure. Instead, 2025’s policy playbook centers on upgrading industrial capacity and driving consumer-led growth. More than ¥300 billion in bond funding—double that of 2024—has been earmarked for a nationwide “old-for-new” program covering appliances, vehicles, and digital devices.

Retail data reflects early traction: more than 66 million consumers have participated, purchasing over 109 million units, pushing retail sales up 5% year-on-year in H1. In Liaoning’s Fuxin City alone, ¥1.1 billion in subsidies generated ¥6.3 billion in direct spending.

On the industrial side, over ¥173 billion in bond funding has flowed into 7,500 equipment upgrade projects. In Chongqing, a local locomotive manufacturer used a ¥22.5 million grant to automate production lines, halving labor costs and doubling output.

Policy traction is already visible across sectors.

In Liaoning's Fuxin city, government trade-in subsidies for digital devices have boosted smartphone retail sales by over 20%. Local authorities report ¥1.1 billion in subsidy applications, generating an estimated ¥6.3 billion in consumption as of late July.

Nationally, more than 66 million consumers have participated in home appliance trade-in schemes in 2025, purchasing over 109 million units. According to the National Bureau of Statistics, China’s total retail sales of consumer goods grew by 5% year-on-year in the first half—remarkable in a landscape of waning consumer confidence and a still-soft housing market.

But the fiscal firepower goes beyond households. In Guangdong's Shantou International Textile City, ¥190 million in local government special bonds funded critical infrastructure, enabling smooth progress on a flagship industrial project designed to integrate textile production with wholesale and logistics.

Despite fiscal pressures, Beijing has prioritized social spending. In H1 2025:

• Social security & employment: ¥2.45 trillion (+9.2%)

• Education: ¥2.15 trillion (+5.9%)

• Healthcare: ¥1.1 trillion (+4.3%)

Programs include targeted job subsidies, entrepreneurial loans, and support for rural revitalization. In Sichuan, a local tourism entrepreneur used a government-backed loan to launch a rural camping site that now employs over 10 workers, each earning an average ¥4,000 per month.

“Strengthening the social dimension of macro policy is not just a safety net—it’s a productivity strategy,” noted He Daixin, Director at the Chinese Academy of Social Sciences.