Chinese local and regional governments (LRGs) saw stable fiscal metrics for the first quarter of 2026, Fitch Ratings said in a recent release.
The LRGs' operating revenue expanded 2.1% year over year, supported by better tax and nontax revenue.
Operating expenditure rose 2.3%, with interest expense, healthcare, social security, and employment spending serving as drivers.
The rating agency forecast a modest drop in capital revenue for this year, following a 19.1% decline in the first quarter, amid dampened land demand and a policy aligning land supply with weak demand.
The Middle East conflict could have potential impacts on the economy although positive signs including growth in the producer price index have emerged, Fitch said.
Infrastructure investment should continue to grow in the second quarter, driven by accelerated special purpose bond issuance and central transfers from ultra-long special sovereign bonds.