Beijing is preparing for the resurgence of trade tensions as Donald Trump returns to the White House in 2025. Trump’s re-election is reigniting concerns over potential tariffs and a more confrontational U.S. stance on trade. This has prompted Chinese lawmakers to consider unveiling a new fiscal package aimed at mitigating potential economic fallout. The proposed measures could include debt swaps for struggling local governments and additional stimulus efforts. However, despite these steps, experts suggest that a massive spending initiative directly targeting household demand—a “bazooka” approach—remains unlikely.
Analysts view Trump’s return as a potential catalyst for Beijing to implement a more aggressive fiscal response. Yet, with household consumption already weakened by a protracted property market slowdown, analysts argue that conventional stimulus tools, such as infrastructure investment and local government refinancing, may not be sufficient. The prevailing sentiment is that any substantial package will hinge on the scope of tariffs and economic pressures imposed by the Trump administration. Current projections suggest that Beijing may need to inject as much as Rmb10 trillion ($1.4 trillion) into the economy, specifically targeting household consumption, to counteract these challenges.