China plans 2026 ultra-long special bonds sale to fund major projects

China is preparing a new fiscal plan built around ultra-long special government bonds in 2026, with the finance ministry saying the money will go toward major national strategies and security tasks.

The ministry said the funds will also support large equipment upgrades and consumer goods trade-in programs. The update came after officials met to carry out decisions from the Central Economic Work Conference.

The ministry did not name the exact projects that will receive the money. It also said it will cut local government debt and stop the creation of new hidden liabilities. This move signals a shift toward steady long-term growth rather than fast short-term stimulus.

China said the leadership will “flexibly and efficiently” use interest-rate cuts and reserve-requirement cuts to keep enough liquidity in the system. It said the budget deficit and government spending in 2026 will stay at what it called a “necessary” level.

The readout was released Thursday after the conclusion of the Central Economic Work Conference. Officials said the country will keep economic support but will not ramp up stimulus. They also said the policy stance has changed from defending against US tariffs to securing stable growth in the long run.

China sets bond plan and adjusts policy tools

The meeting language pointed to a plan to keep stimulus contained. Officials said China handled last year’s external pressure by leaning on strong exports. They added that current policies will stay in place and that the government wants to keep a manufacturing-based growth strategy while it works on growing consumption.

Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered, said “economic policy was in an emergency mode a year ago due to external uncertainties. This year, policies are focusing more on the longer term,” adding there is “no reason for policies to be more expansionary.”

Senior leaders, including President Xi Jinping, attended the conference. They laid out economic priorities for the coming year. Officials said they aim to stop the drop in investment, steady the weakening housing market and stabilize China’s falling birth numbers.

Chinese property stocks reacted fast. A Bloomberg gauge of property shares rose as much as 1.9%. China Vanke climbed 5.7% in Hong Kong. KWG Group Holdings and Sunac China Holdings gained 5.3%.

The meeting happened as the world’s second-largest economy closes a year that ended stronger than many expected. Export strength lifted economic growth.

China’s annual goods trade surplus passed $1 trillion for the first time. But the heavy dependence on foreign buyers carries risk, especially with cheap Chinese exports angering countries that want to protect their industries.

China expands investment plans and addresses debt risks

More problems are building at home. Fixed-asset investment collapsed in the second half of 2025, pushing concerns about weak domestic demand.

Officials said they will increase central government budget spending on investment projects to counter the slowdown.They also said infrastructure may offer more value now, with consumer subsidies losing impact on retail sales.

The conference said subsidy policies will be “optimized,” signaling they may not grow much. Some economists said the program may be extended to service-sector spending.

Officials also said they will “pay due attention” to local government fiscal strains. They said they will reduce debt risks in an active but “orderly” way. They added that several steps will be used to cut operational risks tied to local financing vehicles.

The property market remains one of the biggest threats. China Vanke shocked investors after it proposed delaying a bond repayment. The meeting gave a clear destocking mandate. Officials said they will “control new supply.”

They also encouraged buying unsold commercial homes and turning them into affordable housing. Bloomberg had claimed earlier that China was studying nationwide mortgage subsidies for first-time buyers.

Michelle Lam, Greater China economist at Societe Generale, said “the emphasis on property stabilization is a pleasant surprise,” adding that knowing the strength of the measures will be key, but that the steps show awareness of risks and may help slow falling prices.

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