China expects $1.4 trillion or more in stimulus if Trump wins, report says

• China is considering a new economic stimulus of $1.4 trillion, Reuters reports.
• The package could be approved next week and increase in size if Trump wins the election.
• Trump’s proposed trade policy includes a 60 percent tariff on goods from China.

China could approve a new round of stimulus next week, and officials in Beijing are eyeing even more help for the country’s economy if Donald Trump wins the US presidential election on November 5.

A Reuters report on Tuesday said the country’s top legislature could approve a plan to raise $1.4 trillion in additional debt over the next few years to use as part of an economic relief package.

A major fiscal stimulus will be extended if Republican candidate and former President Donald Trump wins the US election, a report says.

Sources told Reuters the package will be approved by the Standing Committee of the National People’s Congress (NPC) on the last day of its meeting next week.

The package amounts to 10 trillion yuan of debt, of which 6 trillion is raised through special government bonds and is aimed mainly at helping local governments resolve their debts, the report said. The remaining 4 trillion yuan will be raised through local government bonds and used to buy vacant land and real estate, sources told Reuters.

The report said officials are also considering at least another trillion yuan in efforts including boosting consumption and another trillion in capital for large state-owned banks.

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The whopping $1.4 trillion represents more than 8% of China’s total economic output, but still falls short of the country’s stimulus since 2008, which amounted to 13% of the country’s GDP at the time.

Sources said the measures will be confirmed on the final day of the NPC meeting next Friday, giving enough time to take into account the results of Tuesday’s US presidential election.

If Trump is elected, the stimulus package could be larger due to the economic problems Trump’s policies will create for China, sources told Reuters.

Trump has proposed a 20 percent tariff on imports, although he has proposed a much higher 60 percent tariff on goods from China.

The report comes a month after China announced its first round of stimulus measures aimed at supporting its struggling economy since reopening from the COVID-19 pandemic. The country is suffering from a weak real estate sector and rising local government debt, as well as declining consumer demand.

Analysts appeared unimpressed by the initial rounds of stimulus, with several top Wall Street analysts saying the measures were not enough to address consumption-related problems or structural problems in the housing market.

However, some have become more optimistic about the recent measures. Earlier this month, Goldman Sachs analysts raised their forecast for China’s economic growth for 2024 from 4.7% to 4.9%, citing the government’s recent pledges to increase government spending.