China Decided Against Implementing Full Planned Stimulus at Once Due to Trump Risk: Evercore

China has decided to implement its economic stimulus measures in a staggered manner rather than all at once, primarily due to concerns regarding the potential implications of the 2024 U.S. presidential election, as noted by Evercore ISI.

In a recent communication with clients, the firm expressed its belief that Beijing is withholding some fiscal resources in anticipation of Donald Trump potentially winning the election. Such an outcome could lead to increased geopolitical and economic uncertainties, necessitating more robust intervention strategies.

At a recent press conference held by the National Development and Reform Commission (NDRC), no new fiscal stimulus was announced. Instead, the NDRC focused on existing policies, such as a 150 billion yuan consumption subsidy scheduled from September to December. Additionally, they outlined plans to expedite 200 billion yuan in infrastructure investment that was originally planned for 2025, pushing it into the latter part of 2024.

However, these actions are part of pre-established budgets, leading to some disappointment among those expecting more immediate support. Analysts at Evercore ISI acknowledged that while the absence of new stimulus measures was disappointing, it does not signify the end of fiscal actions for the year.

They anticipate that upcoming data releases and a Politburo meeting later in October may still provide opportunities for further policy announcements. The analysts maintain confidence in China’s ability to meet its GDP growth target of 5.0% for 2024.

Beijing’s choice to withhold immediate stimulus may reflect a strategic decision to conserve resources for possible future challenges, especially if Trump were to return to the presidency, which could put additional strain on U.S.-China relations and impact the global economy. Evercore highlighted, “We remain of the view that Beijing would reserve firepower for the scenario of Trump winning the US election,” indicating a cautious approach to balancing immediate economic support with long-term geopolitical considerations.