8 November 2024: 09:30 GMT
We were waiting for what seemed like forever, but China’s fiscal stimulus is finally here and they’ve thrown the kitchen sink at it. China announced 10 trillion yuan for refinancing local government debt. Financing debt with debt. No risks to see here. They will raise the local government debt ceiling to 35.52 trillion yuan and are enabling the issuance of 6 trillion yuan in special bonds. Possibly panicking having seen the FTSE A50 Index futures nosedive over 5%, officials later announced an additional 4 trillion yuan. What could possibly go wrong? 5% GDP growth must be achieved. No matter the cost. But Trump Tariffs are coming. Standard Chartered and Macquarie said 60% tariffs from Trump could damage Chinese GDP by 2%. The export-driven economy is really dependent on US customers: 15% of China’s 2023 exports (that’s $500 billion by the way) headed across the Pacific to American importers, according to UN data. That’s a big slice of the pie.
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