China to speed up US$199 billion of domestic spending to protect growth during US trade war
Cutting debt remains an overriding priority but some fine-tuning allows Beijing to address a deceleration of investment in infrastructure
China has decided to encourage government spending at home as a way to handle the ongoing trade dispute with the United States, reflecting Beijing’s deep concerns about its effect on growth.
The State Council, the state cabinet, said on Monday that it would adopt a “more proactive fiscal policy” and would speed up raising and spending 1.35 trillion yuan (about US$199 billion) for local government, designated to be spent on infrastructure.
These efforts, along with a less aggressive monetary policy stance, are intended to “handle uncertainties in the external environment” – a euphemistic reference to the trade war with the US – and keep economic growth within the preferred range.
The State Council meeting, held on a Monday instead of the usual Wednesday, preceded the Politburo gathering of the country’s top leadership, which is likely to take place soon after President Xi Jinping’s scheduled return from his Africa trip this Sunday.
Releasing the statement before the Politburo’s half-year economic conference may suggest policymakers have already reached a consensus on how to deal with the economic slowdown, said Larry Hu, chief China economist of Macquarie Capital.