Chinese provinces are slashing their revenue outlooks for 2026 following a five-year slump in the property market. Analysts warn this signals continued debt pressure dragging down China's economic growth. Fitch Ratings reported that major provinces expect just 2 to 3 percent growth in public operating revenue this year, matching last year's pace but below overall economic targets. Fitch noted “subdued revenue momentum” and raised concerns about debt repayment risks. Local governments are now prioritizing debt control and avoiding rapid infrastructure expansion. Fitch explained, “A sustained rebound in land purchases is unlikely in the near term, keeping [local government] capital revenue weak or flat in many provinces and constraining government-fund spending growth.” Despite hints from China’s Ministry of Finance about increased fiscal spending in 2026, Fitch expects only modest growth in local government budgets. Provincial budgets show “targeted, policy-directed” spending focused on social services and technology rather than broad local investments to boost growth. Fitch forecasts China’s real GDP growth will fall to 4.1 percent this year from 5 percent in 2023, below many analysts’ expectations. Local governments will keep tight control on discretionary spending and focus on education, public welfare, and boosting consumer demand. The central government will continue to support weaker regions and local investments. Christopher Beddor, deputy China research director at Gavekal Dragonomics, said the central government is shifting financing decisions away from local officials toward national control. This shift will encourage more “targeted” local investments. Analyst Xu mentioned that this means a “de-prioritisation of non-strategic projects,” with spending focused on improving public services and social security.