# China’s Fiscal Balancing Act: Driving Growth While Safeguarding Long-Term Stability

- Link: https://www.thailand-business-news.com/china/239413-chinas-fiscal-balancing-act-driving-growth-while-safeguarding-long-term-stability
- Published: 2025-08-25T00:45:00+07:00
- Author: News Desk

China grapples with fiscal pressures stemming from a property slump, demographic
changes, and external uncertainties. Discussions center on striking a balance between
economic stimulus and long-term sustainability, highlighting the need for efficient
resource allocation and structural reforms to bolster resilience.

## Mounting Pressures and Structural Strains

China faces significant fiscal challenges, with local government finances weakened
by a downturn in the property sector. Reduced land sales revenue has impacted their
long-standing reliance on real estate-driven growth. Additionally, rampant off-budget
borrowing by local government financing vehicles highlights misalignments between
spending needs and stable revenue sources, complicating fiscal oversight. The rapidly
aging population exacerbates long-term fiscal pressures, with over 15 percent of
citizens now over 65—a number expected to exceed 30 percent by 2050. Rising global
trade tensions and a fragmented external environment further introduce uncertainties
to fiscal planning and growth prospects.

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## Beijing Retains Moderate Fiscal Space

Despite these challenges, China maintains moderate fiscal space, particularly at
the central level, with a relatively healthy balance sheet and a debt ratio of 25.6
percent. Even as public debt has grown to 60.9 percent of GDP by 2024, it remains
low by international standards, allowing for potential expansionary fiscal policies.
The country benefits from substantial domestic savings and a state-directed banking
system that offers financial stability. However, the focus should shift from merely
increasing stimulus to implementing targeted and efficient fiscal measures that 
align with long-term goals of innovation, green transformation, and social equity.

## A Prudent Path Forward

China is adjusting its strategy, moving from infrastructure-heavy stimulus to investments
in digital transformation, decarbonization, and social resilience to foster high-
quality growth. Proactive, counter-cyclical fiscal policies aim to stabilize demand
amid external uncertainties. Improvements in fiscal policy coordination, transparency,
and oversight can enhance effectiveness. By directing resources toward green innovation
and high-tech manufacturing while expanding healthcare and education investment,
China can stimulate private consumption and long-term competitiveness. This critical
juncture offers China a chance to stabilize near-term growth and lay the groundwork
for a resilient, sustainable economic future, emphasizing the need for skillful 
policy calibration and structural reforms.

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Source: [China’s Fiscal Crossroads: Stabilizing Growth While Ensuring Long-Term Stability – ASEAN+3 Macroeconomic Research Office ](https://amro-asia.org/chinas-fiscal-crossroads-stabilizing-growth-while-ensuring-long-term-stability)