Created
: 2024.11.05
2024.11.05 18:57
While the US goes to the polls today and will presumably be busy counting votes for the rest of the week, the Standing Committee of the National People's Congress is meeting in China this week to discuss the fiscal package announced at the end of September, Commerzbank's FX analyst Volkmar Baur notes.
"The meeting should actually have taken place at the end of October, but has been postponed to the beginning of November, which has the advantage of allowing a flexible response to the outcome of the US election. It is at least suspected that the fiscal package could be larger if Trump is elected due to the threat of tariffs on Chinese goods than if the Democrats win. Whatever the case, they will try to make the package sound as large as possible."
"According to media reports, up to RMB 10 trillion is planned, which would correspond to around 7.7% of China's GDP. However, a large part of this is only intended for debt restructuring, so it should have no direct effect on the economy. And the rest will probably be spread over 5 years, further reducing the impact."
"However, it must be admitted that the Chinese leadership is adept at keeping secrets. There is certainly great potential for surprises when the fiscal package is presented on Friday. In the short term, the CNY could therefore enter the coming week with new tailwind. However, the outcome of the US election is likely to play the greater role here in the coming days."
Created
: 2024.11.05
Last updated
: 2024.11.05
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