China Politburo Rejects Major Stimulus to Focus on Fiscal Spending

The Politburo of the Communist Party of China announced on July 30, 2026, that it will not implement a major stimulus package for the second half of the year. This decision follows a second quarter where economic growth hit 4.3%, the slowest rate in over three years and below the annual target of 4.5% to 5.0%.

Rather than deploying large-scale stimulus, the leadership will utilize incremental policies and accelerate fiscal spending and bond proceeds on already-budgeted infrastructure projects. This includes advancing the six networks initiative, which covers water, logistics, power, telecommunications, computing, and underground pipelines. The current strategy prioritizes breakthroughs in advanced manufacturing and cutting-edge technologies over reviving domestic demand.

Addressing industrial issues, the Politburo committed to rectify involution, referring to profit-eroding price wars among manufacturers. The leadership also aims to stabilize the real-estate market, reform smaller financial institutions, and curb industrial overcapacity. These measures are intended to limit the spending of indebted local governments and avoid widening the fiscal deficit. The party is scheduled to hold a plenum on party governance in October to continue anti-corruption efforts.