(Yicai) Dec. 8 -- China’s central government will likely issue more than CNY12 trillion (USD1.7 trillion) of new debt next year, with a fiscal deficit ratio of at least 4 percent, according to financial experts.

As China is expected to implement a more proactive fiscal policy in 2026, the first year of the 15th Five-Year Plan period, new government debt will be around CNY12.9 trillion, said Wang Qing, chief macro analyst at Golden Credit Rating International.

New local government special bonds will increase to around CNY5 trillion (USD707.2 billion) from CNY4.4 trillion this year, and the issuance of special treasury bonds will rise to about CNY2 trillion from CNY1.8 trillion, Wang said.

Next year’s fiscal deficit ratio -- the government's budget shortfall compared to the size of the economy -- may stay roughly the same as this year’s, Wang said. Given that 2025’s ratio widened 1 percentage point to a record high, the pace will likely need to stabilise, Wang pointed out.

China will strive to maintain a relatively high economic growth rate of 4.5 percent to 5 percent next year, Wang said. But with tariffs damping down external demand and an ongoing adjustment in China’s real estate market, fiscal policy will need to play a role in boosting consumption and expanding investment, Wang noted.

If the government targets 5 percent growth in 2026, it will need to raise the deficit ratio to around 4.5 percent to 5 percent, equal to a CNY6.6 trillion to CNY7.4 trillion budget deficit, according to Yuan Haixia, director of the research institute of China Chengxin International Credit Rating.

As a result, new government debt may jump to CNY15.5 trillion to CNY16.3 trillion, Yuan predicted.

Looking back at the two previous Five-Year Plans, their first years also saw a marginal expansion in fiscal policy. While macroeconomic conditions are different now, the underlying logic is similar: achieve an "opening-year boom" to stabilise confidence and expectations for the new economic cycle, Yuan pointed out.

As the first year of the next Five-Year Plan, funding needs for major projects will be relatively high next year, and with necessary expenditure to safeguard livelihoods still under pressure, fiscal spending must increase further, Yuan noted.

She also predicted that national general public budget expenditure -- the broadest and most important category of government spending -- will grow over 4.5 percent to more than CNY31 trillion (USD4.4 trillion) in 2026 from this year.

Spending should prioritise addressing shortcomings in healthcare, education, and elderly care to strengthen the social safety net, Yuan suggested.

Meanwhile, fiscal policy should focus on stimulating consumption, backing new types of consumer goods (digital, green, and smart), and promoting cultural tourism, sports, wellness, entertainment, and other emerging areas of service consumption, he said.

Editors: Dou Shicong, Futura Costaglione