China increases budget spending to support economy amid trade war with US

From Yahoo Finance: 2025-04-19 00:10:00

China increased government spending in the first quarter at the fastest rate since 2022, totaling 9.26 trillion yuan ($1.3 trillion), up 5.6% from the previous year. This move aims to support the economy amid a trade war with the US. Economists predict growth to slow from the second quarter.

Major banks have downgraded China’s growth forecast for this year to 4% or lower, below the government’s goal of around 5%. Officials plan to implement supportive measures announced last month, with the possibility of adding more stimulus if needed. Fiscal policy is expected to be a major driver of growth this year.

Analysts suggest faster tax rebate payouts could help offset the impact of US tariffs on Chinese exporters. Land sales and real estate-related revenues continue to decline, affecting government income. Tax revenue fell for a second straight month, leading to a 2.6% decrease in total income under the major budgets in the first quarter.

The gap between government income and spending widened, resulting in a 41% increase in the broad budget deficit to 2.3 trillion yuan. With ongoing challenges in land sales and tax revenues, China faces economic pressures that may require further stimulus measures to support growth.

Read more: China Accelerates Budget Spending to Counter Tariff Woes