China vows ‘very proactive’ fiscal policy before Trump’s return

China said it will adopt a proactive fiscal policy and speed up the implementation of pro-growth measures, as Beijing works to increase public spending this year to bolster an economy threatened by Donald Trump’s return and domestic woes.

“The direction of fiscal policy in 2025 is clear, very proactive,” Vice Finance Minister Liao Min said at a briefing on Friday. “We will provide strong support for economic and social development.”

China’s top leaders have vowed greater fiscal support in 2025 for the world’s second-largest economy. Government expenditure will help encourage consumption and fund infrastructure projects to drive domestic demand, as exports may face higher US tariffs from the incoming US administration.

The country has “ample fiscal policy room and tools to deal with new domestic and external problems,” Liao said.

The government has said it will sell more special sovereign and local bonds this year to fund various programs, including subsidies for buying smartphones and cars. Part of the funding will also be used to rein in local governments’ debt risks and recapitalize banks to beef up their lending ability. 

Liao reiterated that details for the issuance are undergoing the necessary legal process and will be announced at the annual session of the National People’s Congress in March.

Authorities have also promised to raise the official deficit to signal their emphasis on growth. Beijing has typically kept the level at 3 percent of gross domestic product as it seeks to demonstrate fiscal discipline. The official deficit doesn’t count money borrowed through special bond sales.

(Bloomberg)