Fiscal strains are forcing Chinese provinces to slash their budget-revenue expectations for 2026 due to the knock-on effects of a five-year property market slump, and analysts cite the shift as a warning sign that intense debt pressures continue to drag down the nation\u2019s economic growth outlook.<\/p>\n
Major provinces are budgeting for 2 to 3 per cent growth this year in general public operating revenue, broadly in line with last year but below broader economic growth targets, Fitch Ratings said in a research note on Wednesday. It pointed to \u201csubdued revenue momentum\u201d and flagged debt-repayment risks.<\/p>\n
\u201cWe believe local governments will prioritise debt control rather than pursue rapid expansion in infrastructure investment to prop up growth,\u201d Fitch wrote, citing data from 23 Chinese provinces, regions and municipalities.<\/p>\n
Low property values were expected to keep local investments in check.<\/p>\n
\u201cA sustained rebound in land purchases is unlikely in the near term, keeping [local government] capital revenue weak or flat in many provinces and constraining government-fund spending growth,\u201d the credit rating agency said. \u201cOperating spending discipline is also likely to persist, despite the Ministry of Finance\u2019s indications that fiscal spending would be increased in 2026.<\/p>\n
\u201cWe expect modest expenditure growth for [local government\u2019s] general public budgets.\u201d<\/p>\n