China to Increase Fiscal Support, No Stimulus

China to Increase Fiscal Support, No Stimulus

Macquarie economists Larry Hu and Yuxiao Zhang wrote in a note on Tuesday that China is likely to increase fiscal support in the coming months to prevent a further slowdown in economic growth, but the authorities are expected to avoid a large‑scale stimulus package similar to that implemented in 2024. The note projects that second‑quarter growth could slow to around 4.4%, while the economy is estimated to have expanded by 4.7% in the first half of the year. The analysts state that achieving the full‑year growth target of 4.5% to 5% does not appear overly challenging for policymakers.

The authors argue that Beijing can afford to wait for additional data before deploying stronger measures, especially as the United States and Iran are reportedly moving toward a final agreement, which may provide greater clarity on the external environment. They note that the “Just Enough” rule continues to guide policy, and that an AI‑led export boom has reduced the urgency to boost domestic consumption; consumption weakness is attributed to the policy stance rather than an inability to stimulate it.

Macquarie expects the next Politburo meeting, scheduled for late July, to adopt a more supportive fiscal stance, though still within the “Just Enough” framework.

The article was generated with AI assistance and reviewed by an editor.