Bold signals from China’s policy makers this week have led to some high expectations for the stimulus to come. On the back of strong commitments from the Communist Party’s decision-making body to boost growth with a “more proactive” fiscal policy and a shift to a “moderately loose” monetary stance, economists are saying China may raise its budget deficit to the highest in three decades and make the deepest interest-rate cuts since 2015. Chinese shares gained early Tuesday on all that optimism, before running out of steam. We have been here before — a cycle of high hopes followed by disappointment or wariness that what’s being rolled out may not be enough to rejuvenate the world’s No. 2 economy. Will this time be different? President Xi Jinping seems to think so, saying on Tuesday that China is fully confident in achieving its economic growth target this year.
China’s economy has already shown signs of revival in recent months after officials rolled out a broad stimulus package, but its longer-term outlook remains uncertain amid the threat of a potential second trade war with the US and persistently weak domestic demand. Export data Tuesday underscored this tension. Companies rushing to ship goods to the US before new tariffs drove exports higher in November, while imports unexpectedly fell in another sign of continued weakness in the domestic economy. In commodities, the country shipped near-record volumes of aluminum last month as exporters rushed to benefit from tax discounts that were canceled from the start of this month.
