China should scale up its fiscal spending and shift its focus from investment-driven model to a more balanced approach that emphasizes both investment and consumption, experts said.

In a detailed analysis of China's financial strategy, experts are urging officials to enhance fiscal spending while moving away from an exclusively investment-driven approach. The recent data from the Ministry of Finance indicated that China’s general public budget expenditure reached 7.2815 trillion yuan in the first quarter, marking a 4.2 percent increase year-on-year. This expansion comes amid mixed revenue signals where overall budget revenue experienced a slight decline of 1.1 percent, despite sectors such as stamp tax revenue and stock trading stamp taxes showing significant gains. Prominent voices in the economic community, including Li Xuhong, deputy dean of the Beijing National Accounting Institute, have noted that the increase in fiscal spending, particularly aimed at enhancing public welfare and addressing critical issues like healthcare and affordable housing, reflects a proactive policy stance intended to drive high-quality growth. Similarly, Luo Zhiheng, chief economist at Yuekai Securities, emphasized that the strategic pivot toward fiscal expansion—as underscored in the latest Government Work Report—is a deliberate move to channel funds directly into areas that can stimulate business revenue and bolster domestic consumption, rather than merely accumulating cash reserves through tax cuts. These insights are supported by official data points obtained from the Ministry of Finance and echoed by state media sources such as Xinhua News. The emphasis on targeting key segments such as education, social security, employment, and environmental protection further demonstrates the government’s intent to foster a balanced economic structure. Meanwhile, the impressive rise in specific tax revenue streams, particularly in the realm of stock trading, suggests that market participants are responding positively to the fiscal measures in place. In my view, these developments underscore an adaptive economic strategy designed to address both short-term revenue challenges and long-term structural reforms. The dual focus on boosting public welfare and catalyzing private consumption highlights the intent to generate more sustainable growth by diversifying away from a historically investment-heavy model. However, it is also important to note potential challenges, such as the risk of increased government spending failing to translate effectively into vibrant domestic consumption if underlying consumer confidence issues are not adequately addressed. Overall, the European, American, and other international market watchers clearly observe these fiscal maneuvers as both necessary and cautiously optimistic measures to stabilize and modernize China’s economic landscape. The emphasis placed on fiscal policy as a growth lever rather than reliance on tax cuts presents an interesting evolution in the economic policy discourse within one of the world’s largest economies.