China's Record Budget Deficit Sparks Economic Strategy Shift

Chinese leaders propose increasing the budget deficit to a record 4% of GDP for 2024, raising about 1.3 trillion yuan in additional spending. This significant fiscal shift is designed to counter potential U.S. tariff increases, aiming to sustain economic growth amidst challenges such as high national debt and weak demand.

Reports indicate that China's leaders are preparing a fiscal overhaul for 2024, aiming to raise the budget deficit to an unprecedented 4% of GDP. This move seeks to support an economic growth target of 5%, aligning with a 'more proactive' policy following the Central Economic Work Conference and Politburo meetings.

To fund this expanded budget, China plans to issue off-budget special bonds, equating to a 1.3 trillion yuan increase in spending. The strategy aims to brace the economy against looming challenges, including heightened tariffs on Chinese imports as Donald Trump reassumes U.S. presidency.

Despite the hurdles facing China's economy, including property market woes and potential U.S. tariffs, state officials emphasize the necessity for stable growth while maintaining a steady GDP target. Additional monetary policies might include a shift to a more accommodating central bank strategy, potentially involving interest rate reductions and liquidity boosts.

(With inputs from agencies.)