China Records First Annual Fiscal Revenue Drop in 2025 Amid Weak Domestic Demand and Manufacturing Contraction

On January 30, 2026, official Chinese fiscal data revealed a 1.7% decline in total government revenue in 2025—the first annual drop since 2020—driven by a prolonged property sector slump and subdued domestic consumption. Non-tax revenue fell sharply by 11.3%, and local government land sales revenue dropped 14.7%, straining regional finances. On the same day, China's official manufacturing Purchasing Managers' Index (PMI) for January fell to 49.3, indicating contraction in manufacturing activity, with new orders and export orders both below the 50 threshold, while the non-manufacturing PMI also declined.

These figures underscore persistent structural challenges in domestic demand and industrial activity despite China achieving its roughly 5.0% GDP growth target in 2025. In response, authorities have front-loaded special treasury bond funds and cut sector-specific interest rates to stimulate economic activity, with a focus on boosting consumption and advancing manufacturing. The weak indicators affect global supply chains and growth expectations, reflecting broader implications for international trade and economic dynamics.