(8 November 2024 – China) While China has undertaken a mammoth US$1.4 trillion debt swap with local governments, further stimulus measures will be preserved as ammunition against incoming US President Trump’s looming trade war.
While policymakers held back on direct policy measures to stimulate stagnant economic growth, Finance Minister Lan Fo’an promised “more forceful” fiscal policy in 2025 with expanded hawkish measures following President Trump’s inauguration in January.
The US President-Elect has threatened 60 percent tariffs on Chinese goods that could severely hamper trade between the world’s largest economies and stymie promising Chinese export growth despite a strong reshoring impulse exhibited by global corporates – especially Chinese enterprises.
“Policymakers probably saw no need for a robust response to Trump’s victory before he takes office, given the relatively restrained post-election market response. Next year is a different matter, but officials will take that as it comes” commented Pantheon Macroeconomics Chief China Economist, Duncan Wrigley.
“From the fiscal management perspective, this is the right thing to do. But for the people concerned about the growth momentum of the economy, this will not address that in a significant way. I’m not saying this isn’t positive for growth, but the impact would be pretty indirect and spread across many years” stated ANZ Chief Economist for Greater China, Raymond Yeung.