China Sets Record 4% GDP Deficit for 2025, Aims for 5% Growth Amid U.S. Tariff Threats

Dec 17, 2024, 06:08 AM

Chinese leaders have agreed to raise the budget deficit to 4% of gross domestic product (GDP) next year, marking the highest on record, while maintaining an economic growth target of around 5% for 2025. This decision comes as part of plans to counter potential tariff threats from the United States, with the increased deficit aimed at funding stimulus measures. The move reflects a shift towards a more proactive fiscal policy, with the additional spending to be financed through the issuance of special bonds outside the traditional budget. The strategy is designed to address internal economic challenges, including a housing crisis, high local government debt, and weakened consumption, as well as external pressures from potential U.S. tariff hikes.