Investing.com — China recently unleashed a 10 trillion yuan injection to ease its economic woes, but the risk of economic growth falling shy 5% and fresh tariffs from a second Donald Trump administration could likely force Beijing to return to the stimulus table as soon as next year.
“We think additional stimulus will be rolled out to address domestic and external headwinds in 2025 and beyond, especially once Trump’s tariff plans become clearer,” UBS said in a recent note.
A second Trump administration is likely to result in a 20-30% hike to the average US tariff rate by mid-2025, UBS estimated as the most likely scenario. Expect China to deliver a “multi-year fiscal expansion in response,” the bank added.
A dip in growth below 5% could also trigger a forceful response, UBS added, forecasting China GDP growth of mid-4% in 2025.
The remarks come just days after the National People’s Congress Standing Committee on Friday rolled out a multi-year local government debt resolution plan totaling 10 trillion yuan.
While the size of the debt package met expectations, UBS believes that “the lack of additional measures to boost consumption and property markets left investors…
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