Investing.com -- China has opted to stagger its economic stimulus measures rather than delivering them all at once, primarily due to concerns over the potential outcome of the 2024 U.S. presidential election, according to Evercore ISI.
In a note to clients on Tuesday, the firm said it believes Beijing is holding back some of its fiscal firepower in case Donald Trump wins the election, as this could bring geopolitical and economic uncertainties that would require more aggressive intervention.
Evercore said that at a recent National Development and Reform Commission (NDRC) press conference, no new fiscal stimulus was announced.
Instead, the NDRC emphasized existing policies, including the 150 billion yuan consumption subsidy slated for September to December.
They noted the commission also announced plans to bring forward 200 billion yuan of infrastructure investment, originally budgeted for 2025, into the latter part of 2024.
However, these measures fall within already planned budgets, disappointing some expectations for larger immediate support.
Evercore ISI analysts state that while the lack of new stimulus was a "bummer," it’s not the end of fiscal action for the year.
They think the upcoming data releases and a Politburo meeting later in October may still offer windows for further policy announcements. The analysts remain confident in China achieving its 5.0% GDP growth target for 2024.
Beijing’s decision to hold back stimulus now may reflect a strategic move to reserve resources for potential future challenges, particularly if Trump re-enters the White House, which could strain U.S.-China relations and the global economy.
"We remain of the view that Beijing would reserve firepower for the scenario of Trump winning the US election," said Evercore, indicating China’s cautious approach to balancing short-term economic support with long-term geopolitical risks.