China signalled on Thursday it will rely on fiscal stimulus to manage the economy in 2026, pledging to maintain a “necessary” budget deficit and debt levels to shore up growth while tackling local government financial strains.

The commitment, outlined after a key agenda-setting meeting, underscores Beijing’s intent to keep spending high and deploy flexible monetary tools as it faces pressure to boost domestic demand and offset global trade tensions.

Cross-Cyclical adjustments

China will increase counter-cyclical and cross-cyclical adjustments next year, the official Xinhua news agency reported, citing the annual Central Economic Work Conference held December 10–11.

“We will continue to implement a more proactive fiscal policy: maintain necessary fiscal deficit, total debt scale, and

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