China’s NPC (National People’s Congress) revealed the 2025 Government Work Report today. The Politburo announced that it is setting its economic growth target for 2025 at 5%, and its CPI inflation target at 2%. No surprises there; where there was a surprise is that the fiscal deficit will widen to around 4% of GDP, which is the largest in over 30 years (still the number came in below some Wall Street estimates). The increased fiscal stimulus goes hand-in-hand with the recent loosening in the monetary policy stance from “prudent” to “moderately loose”, the first time that China had adopted such accommodative policy in 14 years that was announced in December. China's deficit increase pledge comes at a time when Germany just announced its "whatever it takes" stimulus moment as it now plans to unleash a record fiscal deficit and flood the country with debt in order to become the best armed military in Europe (something awful deja vu about this).
By contrast, Donald Trump used his address to Congress yesterday to say that his Administration will aim to balance the Federal budget without giving firm details on how that would be achieved.
