China is expected to announce its fiscal support plan on November 8, the last day of its five-day meeting held by President Xi Jinping and his high-level staff, just days after the U.S. election in which the winner should be announced by then.
The outcome of the election, especially if Republican candidate Donald Trump wins, will significantly impact the Chinese economy. After all, Trump has threatened to raise tariffs on U.S. imports from China by 60% or even 200%, while Democratic candidate Kamala Harris has not indicated any significant changes from what Biden’s administration has imposed.
If Trump’s tariffs are implemented, they could harm Chinese exports, a crucial component of the economy. Therefore, experts believe that in response, China may implement a bigger domestic stimulus by about 10-20%, which would also give the Chinese yuan some strength against the greenback.
However, despite these expectations, experts think China will not fully align with Trump and will focus on upgrading its technology. Meanwhile, the People’s Bank of China has decided to cut interest rates in late October to support the economy.
As for the possible outcome of the meeting, experts forecast that China may consider issuing more than 10 trillion yuan in debt over the next few years, which could push its deficit to over 4%. This comes as the Chinese government has set a deficit target of 3% for this year.
