China Plans Record Budget Deficit of 4% Of GDP In 2025

• Chinese leaders agreed last week to raise the budget deficit to 4% of gross domestic product (GDP) next year, its highest on record, while maintaining an economic growth target of around 5%, two sources with knowledge of the matter said.
• The new deficit plan compares with an initial target of 3% of GDP for 2024 and is in line with a "more proactive" fiscal policy outlined by leading officials after December's Politburo meeting and last week's Central Economic Work Conference(CEWC), where the targets were agreed but not officially announced.
• The additional one percentage point of GDP in spending amounts to about 1.3 trillion yuan ($179.4 billion). More stimulus will be funded through issuing off-budget special bonds, said the two sources, who requested anonymity as they were not authorised to speak to the media.
• These targets are usually not announced officially until an annual parliament meeting in March. They could still change before the legislative session. The State Council Information Office, which handles media queries on behalf of the government.
• The stronger fiscal impulse planned for next year forms part of China's preparations to counter the impact of an expected increase in U.S. tariffs on Chinese imports as Donald Trump returns to the White House in January.

(Source: Reuters)