On March 5, the Fourth Session of the 14th National People's Congress (NPC) commenced, with the budget report submitted for review. Over the following days, this 38-page "national ledger" will be examined by NPC delegates. The "national ledger," formally titled the "Report on the Execution of the Central and Local Budgets for 2025 and the Draft Central and Local Budgets for 2026," is commonly referred to as the budget report. Alongside the Government Work Report, the budget report is a key document during the annual "Two Sessions." Its significance lies in how the allocation of funds truthfully reflects the focal points of macroeconomic policy and national governance priorities for the new year. Particularly in a "kick-off year," demands for fiscal expenditure across various sectors are typically high. As the first fiscal plan for the initial period of the 15th Five-Year Plan, how funds are spent and how policies are applied are crucial for achieving set objectives. An analysis of the "addition, subtraction, multiplication, and division" within the budget report helps clarify how a more proactive fiscal policy will support China's economy in getting off to a strong start.

**Addition: Expanding the Scale of Fiscal Expenditure** In 2026, China will continue to implement a more proactive fiscal policy. One manifestation of this "more proactive" stance is the expansion of funding. The budget report proposes to enlarge the fiscal expenditure scope this year, ensuring necessary spending intensity. The national general public budget expenditure is set to reach 30 trillion yuan for the first time, a 4.4% increase from the previous year, adding approximately 1.27 trillion yuan. Where will these funds be allocated? The report indicates that the kick-off year brings substantial demand for fiscal expenditure across sectors. Key outlays such as scientific and technological innovation, rural revitalization, and industrial transformation and upgrading require rigid growth, while basic livelihood safeguards including pensions, education, and healthcare need continued strengthening. Social security and employment expenditure, along with education expenditure, constitute the largest shares, each exceeding 4 trillion yuan, at 4.7081 trillion yuan and 4.5766 trillion yuan respectively. Furthermore, health expenditure is set at 2.2551 trillion yuan, science and technology expenditure at 1.2924 trillion yuan, and housing security expenditure at 874 billion yuan. What do these figures in the hundreds of billions and trillions mean for ordinary citizens? According to the budget report, the monthly minimum standard for basic pensions for urban and rural residents will increase by another 20 yuan this year. The per capita government subsidy standard for basic medical insurance for urban and rural residents will rise by 24 yuan, reaching 724 yuan per person annually. Regarding the deficit-to-GDP ratio, it remains consistent with last year, planned at around 4%, with the deficit size reaching 5.89 trillion yuan, an increase of 230 billion yuan from the previous year. This means the government will raise more funds through borrowing to direct towards key areas and essential public services. Notably, of the 5.89 trillion yuan deficit, 5.09 trillion yuan is attributed to the central government fiscal deficit, while the local government fiscal deficit remains at 800 billion yuan, unchanged from 2025. The entire increase in the deficit is allocated to the central government, avoiding additional burdens on local authorities.

**Subtraction: Tightening Belts in Party and Government Agencies, Prioritizing Local Guarantees** Party and government organs leading by example in "tightening their belts" has become customary. This year's Government Work Report reiterated the necessity to ensure every saved penny is spent on critical development points and urgent public needs. The budget report emphasizes meticulous budgeting, adherence to frugality in Party and government operations, strict control over various fiscal expenditures, enhanced assessment of fiscal affordability, and resolute prevention of wasteful spending and "eating the rice of the next day." Non-essential and non-priority expenditures will be tightly managed, with strict controls on general expenditures. Management will be strengthened for official overseas trips, domestic study exchanges, official receptions, domestic travel, official vehicle use, and conferences and training. Various festivals, exhibitions, and forums will be streamlined and standardized, with strict limitations on the construction and renovation of government buildings. Extravagant "vanity projects" and "image projects" that waste resources and burden the people are prohibited, alongside preventing major decision-making errors leading to severe waste. Simultaneously, the budget report calls for reducing some specific transfer payments while increasing general transfer payments to local governments. This measure, seemingly a "subtraction," effectively functions as an "addition" by enhancing local fiscal autonomy and available resources. This year, central-to-local transfer payments are arranged at 10.415 trillion yuan, a 2.2% increase, maintaining a scale above 10 trillion yuan. The report insists on prioritizing the "Three Guarantees" in budget arrangements, fully allocating funds for these guarantees, strengthening budget execution control, and fully ensuring the needs for the "Three Guarantees" to prevent the diversion or misappropriation of these funds.

**Multiplication: Leveraging Fiscal Funds to Boost Consumption and Investment** How is the multiplicative effect of fiscal policy calculated? This is primarily demonstrated through the leveraging role of fiscal funds, particularly in expanding domestic demand. This year, China will issue 1.3 trillion yuan in ultra-long-term special government bonds. Of this, 800 billion yuan is allocated for "dual key" projects, 200 billion yuan to support large-scale equipment upgrades, and 250 billion yuan to support the replacement of consumer goods. Concurrently, 100 billion yuan in special funds for fiscal-financial coordination to stimulate domestic demand will be allocated to reduce corporate financing costs, enhance household consumption capacity, and expand the supply of quality services. Specifically, the subsidy policy for individual consumption loans and loans to service industry businesses will be expanded, with increased subsidy ceilings and extended implementation periods. The loan subsidy policy for small, medium, and micro-enterprises will continue. Whether directing fiscal funds towards "dual key" projects and "dual new" initiatives or allocating special funds for stimulating domestic demand, these are practical measures that integrate fiscal support for public welfare with the promotion of consumption and investment, targeting both physical assets and human capital. This approach amplifies policy effectiveness, more vigorously stimulates private investment, promotes household consumption, and enhances the endogenous dynamism and reliability of the domestic circulation.

**Division: Lifelong Accountability and Retroactive Investigation for Illegal Debt Issuance** The budget report emphasizes the importance of risk prevention, remaining vigilant against early signs and tendencies that could disrupt stable fiscal operations, taking timely and effective countermeasures, prioritizing prevention, and achieving synergy between risk prevention and development promotion. This year, China has set a new quota for local government special bond issuance at 4.4 trillion yuan, supporting major project construction, resolving implicit debt, and addressing government arrears. The report reiterates requirements for local government debt resolution, insisting that provincial governments assume overall responsibility while city and county governments exhaust efforts to reduce debt, accelerating the resolution of existing implicit debt, and strictly preventing deceptive or违规 debt resolution. A zero-tolerance, high-pressure regulatory stance will be maintained to resolutely curb the emergence of new implicit debt. Supervision over preventing and resolving local government debt risks will be intensified, with lifelong accountability and retroactive investigation for违规 debt issuance activities. Constraints and oversight over the exercise of public power in financial and economic areas will be strengthened, strictly prohibiting expenditures beyond or without budget approval, tightly controlling budget adjustments, and ensuring fiscal funds are not misused and policy implementation does not deviate. Furthermore, for local government financing vehicles, classified and orderly reforms will be promoted to resolutely剥离 their government financing functions, strictly prohibiting the establishment of new or disguised financing platforms.