In the first half of 2026, the fiscal self-sufficiency rate for local governments across China generally fell below 100%. The Ministry of Finance has responded by stating that this situation is normal and expected.

The spending of local governments relies not only on their own revenue but also heavily on central transfer payments. Due to a slowing economic growth rate, the decline of the land-based fiscal model, and the rigid increase in spending on people's livelihoods, financial pressure has intensified.

The central government has arranged 10.42 trillion yuan in transfer payment funds, with a focus on ensuring basic expenditures for grassroots operations, including "three guarantees" (guaranteeing salaries, operations, and basic public services). It will also deepen budget reforms to improve the efficiency of fund utilization.

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