China Staggers Economic Stimulus Measures

According to Evercore ISI, China has chosen to stagger its economic stimulus measures instead of implementing them all at once. This decision stems from concerns regarding the potential outcome of the 2024 U.S. presidential election.

In a note to clients on Tuesday, Evercore suggested that Beijing is holding back some fiscal resources in anticipation of a possible victory by Donald Trump. Such an outcome could lead to geopolitical and economic uncertainties that might necessitate more aggressive intervention.

At a recent press conference by the National Development and Reform Commission (NDRC), no new fiscal stimulus was announced. Instead, the NDRC reiterated existing measures, including a 150 billion yuan consumption subsidy scheduled for September to December.

They also mentioned plans to advance 200 billion yuan of infrastructure investment, initially budgeted for 2025, into late 2024.

However, these measures remain within pre-planned budgets, leading to some disappointment over expectations for larger immediate support.

Evercore ISI analysts noted that while the absence of new stimulus was disappointing, it does not signify the cessation of fiscal action for the year. They anticipate that upcoming data releases and an October Politburo meeting might present opportunities for further policy announcements. Analysts maintain their confidence that China can achieve its 5.0% GDP growth target for 2024.

Beijing's decision to withhold immediate stimulus may reflect a strategic approach to conserving resources for potential future challenges, especially if Trump returns to power, which could impact U.S.-China relations and the global economy. Evercore emphasized this view: "We remain of the view that Beijing would reserve firepower for the scenario of Trump winning the US election," highlighting China's cautious strategy of balancing immediate economic support with long-term geopolitical risks.