- China is considering a fresh $1.4 trillion stimulus, Reuters reported.
- The package could be approved next week and would increase in size if Trump wins the election.
China could approve a fresh round of stimulus in the next week, and officials in Beijing are eyeing even more aid for the country's economy in the event Donald Trump wins the US presidential election on November 5.
A report from Reuters on Tuesday said the country's top legislative body could approve a plan to raise $1.4 trillion in extra debt over the next few years to deploy as part of an economic rescue package.
The large fiscal stimulus would be increased if Republican nominee and former President Donald Trump wins the US election, the report says.
Sources told Reuters the package would be approved by the Standing Committee of the National People's Congress (NPC) on the last day of its meeting next week.
The package amounts to 10 trillion yuan worth of debt, with 6 trillion raised by special sovereign bonds and put largely toward aiding local governments deal with their debts, the report says. The remaining 4 trillion yuan would be raised by local government bonds and put toward idle land and property purchases, the sources told Reuters.
The report says the officials are also considering another at least another one trillion yuan aimed at efforts including boosting consumption, and another trillion in capital for large state banks.
The whopping $1.4 trillion amounts to over 8% of China's total economic output, but is still short of the country's stimulus measures from 2008 which totaled 13% of the country's GDP at the time.
The sources say the measures would be confirmed on the last day of the NPC's meeting next Friday — giving ample time to factor in the results of the US presidential election, which takes place on Tuesday.
If Trump is elected, the stimulus package could be higher due to the economic challenges Trump's policies would pose for China, the sources told Reuters.
Trump has proposed sweeping 20% tariffs on imports, though he's pitched much steeper 60% tariffs on goods from China.
The report comes a month after China announced its first round of stimulus measures, aimed at propping up its economy, which has struggled since reopening following the COVID-19 pandemic. The country has been plagued by a weak property sector and surging local government debt, as well as depressed consumer demand.
Analysts appeared unimpressed with the initial rounds of stimulus, with several top Wall Street analysts saying the measures aren't enough to solve the issues facing consumption or the housing market's structural problems.
Some have turned more optimistic on more recent measures, though. Earlier this month analysts from Goldman Sachs upped their 2024 forecast for China's economic growth from 4.7% to 4.9%, citing recent promises of greater public spending by the government.