Chinese provinces are cutting their 2026 revenue outlooks as debt pressures intensify after a prolonged property market slump. Analysts warn the fiscal strain will limit local governments’ ability to boost growth through large infrastructure projects.
Fitch Ratings said most regions expect only 2 to 3 percent growth in operating revenue, raising concerns about debt repayment risks.
Fitch expects offshore financing in 2026 for #China's LGFVs to be driven by anticipation of further US Federal Reserve rate cuts and #refinancing needs for CNY274 billion of #bonds maturing in 2026.
— Fitch Ratings (@FitchRatings) February 13, 2026
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Low land sales and weak property values continue to depress local income, pushing officials to tighten spending and prioritize debt control.
Instead of broad stimulus, budgets point to targeted investments in technology, advanced manufacturing, and essential services.
Beijing is reinforcing fiscal discipline by steering financing decisions toward the central government and relying on special purpose bonds for strategic projects.
Economists say tighter controls will sideline non essential spending while boosting education and social welfare. Economist Intelligence Unit estimates China’s growth will slow further, underscoring the drag from local government debt.
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TIPP Staff
