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China's economic recovery
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China’s provinces turn to SOE profits after worst first-quarter fiscal stress since 2020

Guangdong and Jiangsu are among those looking to tap state capital returns to shore up budgets

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Residential high-rise buildings under construction are seen with tower cranes on May 1 in Shenzhen, Guangdong province. China’s ailing property sector has severely curtailed revenue for local administrations in recent years. Photo: Getty Images
Xinyi Wuin Beijing
A growing number of Chinese provinces are proposing to increase profit remittance rates from state-owned enterprises to secure alternative funding sources, as local revenues fell short of public expenditure during the first three months of the year.

Following a similar move by the central government, provinces including Guangdong, Jiangxi, Jiangsu and Hainan have announced plans to raise collection rates on state capital returns in their regional five-year plans for the 2026 to 2030 period.

Jiangsu, a fast-growing province in eastern China, said it would “dynamically optimise” collection rates. Guangdong, the nation’s largest provincial economy, similarly announced it aimed to “reasonably raise” rates.

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Hainan, meanwhile, said it would seek to refine its tiered profit remittance framework for state-owned enterprises and gradually increase the share of revenues allocated to the public budget, according to its development blueprint.

The proposals came as local governments face intensifying budgetary pressures. No Chinese province generated sufficient local revenue to cover public spending during the first three months of 2026, according to data compiled from Wind and local departments of finance.
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That marked the first time since the pandemic in 2020 that the first quarter of the year recorded a nationwide shortfall before central government transfers.

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