Fiscal Policy

China’s wait-and-see approach exposes policy limit

7 May 2025

The country's top three regulators unveiled rate cuts, liquidity injections and other steps in a rare meeting but held off on major spending. It shows Beijing is biding its time ahead of US trade talks. Yet the reluctance also stems from limited room to expand the fiscal deficit.

Tariffs leave China with even more mouths to feed

16 Apr 2025

GDP grew 5.4% last quarter, but Trump's trade war means it's downhill from here. Beijing needs a plan to support exporters, as well as consumers and property. With officials now equating the economy with national security, a long-touted big stimulus package may finally emerge.

Tariffs tax markets-to-policy feedback loops

3 Apr 2025

When investors freak out, lawmakers tend to respond, as in 2008 when Congress rejected banking bailouts. Trump’s trade jolt has now led to a weaker dollar, lower Treasury yields and falling stock prices. Varied Washington translations, however, distort otherwise reliable signals.

Make in India could do with a dose of MAGA energy

1 Apr 2025

New Delhi may let its $23 bln flagship manufacturing scheme lapse after Reliance, Adani and others missed targets. The government offered subsidies but failed to cut red tape. Creating jobs for the country's giant workforce will require a Donald Trump-style all-it-takes approach.

China’s banks head towards new lending woes

1 Apr 2025

The state hopes injecting $72 billion of capital into four big lenders will spark consumer-driven economic growth. But it adds little firepower, and the country’s high savings rate suggests the banks have their work cut out. Doing Beijing’s bidding is already causing stress.

Big state backlash may pay biggest dividends in UK

20 Mar 2025

Elected leaders from Argentina to the US are pledging to cut spending, shrink the state, and cut red tape. Despite similar rhetoric their priorities are very different, as are the potential rewards. In the developed world, Britain’s approach has the best chance of success.

Stingy Uncle Sam subverts both suppliers and state

18 Mar 2025

Abrupt spending cuts and pressure to justify existing deals are wreaking havoc on US government contractors from Lockheed to Pfizer. Some $760 bln of annual outlays are at risk, spooking investors. Worse, frugality threatens to impair national strategic capabilities for decades.

Beijing buzzwords hint at slow-burn consumer fix

10 Mar 2025

Lower income taxes and shorter work weeks were among the most-discussed topics during China's annual policy meeting. Those are sensible steps to boost consumption over the long term. But with deflationary risks mounting, officials are under pressure to deliver quick stimulus.

Trump will splinter world’s ‘China plus one’ plans

6 Mar 2025

The US president is moving aggressively against China’s exports, the economic pillar of its strategic adversary, by dangling secondary sanctions on third countries. It heralds a push towards a cleaner segregation of US-centric supply chains from those for the rest of the world.

US budget botches subtraction and multiplication

27 Feb 2025

Republicans are trying to preserve $4.5 trln of tax cuts by slashing government spending. The healthcare, food assistance and revenue collection programs being targeted, however, punch far above their weight economically. Higher debt and slower growth will only spook bond buyers.

Deficit will push Hong Kong closer to the mainland

25 Feb 2025

The Asian hub's fiscal reserve has dropped 40% since 2020 due to shrinking revenue from land and property sales. The city is ramping up borrowing in response. China is a natural buyer of the debt, allowing Beijing to diversify its reserves and protect its gateway to the world.

Uncle Sam’s debt offers flimsy refuge to investors

6 Feb 2025

Yields on 10-year US government bonds have dropped amid signs of slowing growth and President Donald Trump’s tariff talk. But the safe haven faces threats from $8 trln in unfinanced tax cuts, inflation, and Elon Musk’s meddling with payment systems. The calm is unlikely to last.

Tariff whiplash fires up China stimulus games

4 Feb 2025

President Trump paused steep levies on Mexico and Canada but his aggression against allies puts a worst-case scenario for Beijing back on the table. Chinese policymakers can't avert disaster just by honouring its last trade truce with the US. They'll need to be unusually nimble.

Trump’s economic trench warfare needs an off-ramp

3 Feb 2025

The US president is betting his economy can weather a tariffs tit-for-tat better than Canada and Mexico. But it'll raise inflation for Americans, too, and it's hard to see how he wins. Even if the battle is short, Washington's poor treatment of allies will have lasting effects.

India’s tax cuts grasp at a fleeting growth fix

3 Feb 2025

By hiking the income-tax exemption threshold, Narendra Modi’s government hopes the middle class will go out and spend. But that leaves the state relying on 1% of the working age population to help pay its bills. It throws the urgency to tackle stagnant wages into sharp relief.

Excessive belt-tightening risks choking US economy

28 Jan 2025

A budget edict citing 'wokeness' and 'transgenderism' claims to temporarily freeze $3 trln in federal grants and loans. Chipmakers, small business owners and medical researchers are among those probably affected. If no one stops the overreach, the consequences may be dangerous.

Dear Chancellor: fiscal sophism will buy some time

23 Jan 2025

Rises in bond yields have slashed UK finance minister Rachel Reeves’ 10 bln pound reserve. That could force her to cut spending, raise taxes or break her own rules. Breakingviews imagines a memo from an enterprising aide with a different, if risky, solution: change one date.

Mass deportation is either bluster or vast danger

16 Jan 2025

The incoming US administration’s promised historic expulsion effort could cause enormous harm. Deporting three-quarters of immigrants without legal status might cut GDP by 7% by 2028 and raise prices, particularly hitting states like Texas. There’s a reason past plans fizzled.

Country Garden’s debt fix is a bet against Beijing

10 Jan 2025

The property developer, once China’s largest by sales, is offering a 90% haircut as an option to restructure $16 bln of offshore bonds. Acceptance would imply creditors have given up hope that the government is about to put more substantive policies in place to boost home prices.

Politicians will hinder central banks’ easing plan

3 Jan 2025

Economies are growing and inflation is falling globally. It’s an ideal environment for central bankers to lower rates. Yet governments are loath to cut debt, which hit 93% of GDP in 2024. Without fiscal restraint, monetary policy’s path will be bumpy, as will financial markets.