Why Xi may be planning a bigger bazooka for Trump's return

A possible second term muddies an already-chaotic debate in Beijing, adding to disagreement over the size of a fiscal stimulus and how it should be spent.

- Shuli Ren

They might have to meet again. As President Xi Jinping decides on the size of China's stimulus package, he has to consider the possibility that former US president Donald Trump, who started a trade war in 2018, may soon be in the White House for a second term.

After Mr Xi's policy pivot in late September to meet his economic growth target of 5 per cent, investors are looking at the gathering of the Standing Committee of the National People's Congress (NPC), usually held in late October. Concrete details have so far been largely lacking, pausing the enthusiasm of markets. In 2023, Chinese legislators increased the government's fiscal deficit, the first intra-year revision since 2000, in a tacit acknowledgment that the post-Covid-19 economic recovery was stalling. Investors will be hoping for considerably more in 2024.

That 2024's NPC will convene from Nov 4 to 8, which means policy details are unlikely to emerge until after we get some clarity on the US election, might be a sign that Beijing is on high alert. A possible Trump win will only muddy the already-chaotic debate among senior officials on the size of fiscal borrowing, as well as how the money should be spent.