Mint Quick Edit | Market cues from China can be positive too
Summary
- China’s 2025 target for GDP growth looks ambitious in today’s trade context but it’s counting on a fiscal stimulus. Its steel supply plan, meanwhile, has lifted Indian stocks in this sector. We must track Chinese moves.
China has forecast that its economy will expand by 5% in 2025, the same as last year. Given its exposure to trade uncertainty, this is quite ambitious. With US President Donald Trump’s tariff actions taking aim at China as a key target, shipments between the world’s two largest economies will suffer disruption.
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Beijing has deployed retaliatory tariffs. Moreover, China faces weakening demand at home amid a property-sector slump, even as its attempt to shift from an investment-led growth model to a consumption one has failed so far.
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Beijing seems to be counting on a fiscal stimulus. It plans to issue ultra-long special treasury bonds worth roughly $182 billion this year, up from $42 billion last year. This will widen its fiscal deficit to 4%, the highest in about three decades. How sharply central spending is aimed will shape its outcome.
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In India, the highlight of Beijing’s plan is its push to reduce steel output to contain over-supply. This could spell relief for Indian steelmakers under pressure from China’s exports and worried about tonnes of its excess capacity being dumped here. The news has lifted their share prices. While Trump’s aggression is in the spotlight, we must also watch what China is doing.
