The fourth session of the 14th National People’s Congress opened on the morning of March 5. Delivering the Government Work Report, State Council Premier Li Qiang outlined plans to issue 1.3 trillion yuan in ultra-long special treasury bonds to sustain funding for the “Two Major” initiatives and “Two New” initiatives. However, Guo-Chen Wang, Associate Research Fellow of The First Research Division at the Chung-Hua Institution for Economic Research (CIER), observed that this year’s agenda largely mirrors last year’s, leaning heavily on the ultra-long treasury bond strategy as a fiscal lifeline.
Wang noted that the 1.3 trillion yuan quota for ultra-long special treasury bonds remains unchanged from the previous year. Fiscally, Beijing has refrained from delivering the anticipated heavier stimulus, opting instead to maintain the status quo. The report also indicates a persistent reliance on structural policy tools that disproportionately favor the production side over consumption, suggesting that the consumer segment still requires substantial support.
Wang pointed out that some international investment banks had previously miscalculated, projecting a 400-billion-yuan increase in both ultra-long treasury bonds and local government debt for the year. In reality, a comparison with this year’s report reveals that issuance volumes remain flat compared to last year. This steady approach aligns with the directives of the Chinese government and the Central Economic Work Conference.
Furthermore, the report notes that reserve requirements will be leveraged for loan substitution, capping the reserve requirement ratio (RRR) at 0.2% and limiting RRR cuts to a maximum of 0.5%. However, structural monetary policy tools will be more widely deployed. Under these less accommodating policy conditions, the economy is expected to face mounting headwinds.
Wang observed that while China has rolled out policies to spur consumption since last year, the tangible impact has been muted. This year’s Government Work Report cites bolstering social security and encouraging consumption, signaling that forthcoming stimulus measures will likely mirror past efforts. Despite recent rhetoric emphasizing demand-side testing and consumer-driven reforms—such as credit expansion or social security adjustments—the core strategy remains fixated on scaling up production first, and then incentivizing the public to consume the output.
Wang highlighted that the report disproportionately favors the production side over consumption, leaving the consumer segment wanting. Roughly half of the agenda is dedicated to producer services, reflecting last year’s priorities. Judging from the work reports of private enterprises, the initial forecasts were largely on target. Across the report’s five major economic chapters, the overriding focus remains firmly anchored on Supply-Side Structural Reform rather than demand-side interventions. The single bright spot is the one-time credit repair score initiative designed to help consumers restore their credit, though this falls short of being a fundamental fix.
On the topic of risk management, the government’s approach to affordable housing construction is arguably the most confounding. Urban village redevelopment is executed by local governments on an alternating-year basis, and utilizing public funds to acquire properties for conversion into affordable housing is ultimately less efficient than facilitating direct purchases. Beijing is currently deploying fiscal resources to buy up existing housing inventory and transform it into social housing, a strategy that only exacerbates fiscal strain. Meanwhile, the state has launched debt management initiatives backed by capital from large state-owned banks.
Wang noted that the Government Work Report reflects Xi Jinping’s overarching strategy: accelerating technological self-reliance. The underlying premise is that successful technological breakthroughs will generate the economic capacity needed to service national debt. In an ideal scenario, technological advancement would catalyze a broader economic recovery, but it remains to be seen whether these tech-centric initiatives will yield tangible results. The technology sector can only pull specific segments of the economy forward, and traditional industries remain important.
Wang addressed the report’s position on real estate regulation by presenting a hypothetical scenario: if 100 yuan was invested in the property market, that capital is now being redirected towards the high-tech sector. However, this transition is imperfect and results in capital leakage. Even if high-tech investments keep pace with broader fixed-asset investments, the outsized proportion of government spending will still leave high-tech ventures facing an overall funding shortfall.
Original Source: Economic Daily News (March 5, 2026). Decoding this Year’s Mainland Government Work Report. Scholar: Still Relying on Ultra-long Treasury Bond Strategy to Save Public Finances. Economic Daily News.