After Trump's threats – China takes unique decision

For the first time in over a decade, China is making a drastic shift regarding the country's economy. The goal: to boost the country's consumption.

» Published: December 09 2024

After Trump's threats – China takes unique decision
Photo: Andy Wong/AP/TT

China's economy has not shown the same strength since the pandemic. Moreover, the country is overshadowed by the threat of a trade war with the US, where the incoming President Donald Trump has warned of tariffs of 60 percent directed at China.

In an attempt to reverse the trend, the country's politburo, led by President Xi Jinping, is now making a radical decision. For the first time since 2011, a change is being made to the country's monetary policy.

From previously using the term "prudent" as the monetary policy's direction, it will now be "moderately expansionary". The stance on the country's fiscal policy is also changing from "more proactive" to "proactive" compared to before.

Great significance

The statement comes ahead of the annual conference where the economic goals for the coming year will be discussed. What may seem like a small linguistic difference is expected to have great significance:

The wording of this statement from the politburo meeting is unprecedented. The political tone shows strong faith in Trump's threats, says Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group, to the news agency Bloomberg.

Rare measure

It is also a rare measure from China. Since the beginning of the 90s, it is only the fifth time this type of change has been made. Previously, it has occurred in conjunction with, among other things, the financial crisis of 2008-09 and at times when the country has struggled with rapidly rising inflation.

On the Hong Kong stock exchange, there is also strong optimism around the announcement, with the Hang Seng index closing up 2.8 percent.

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By TTThis article has been altered and translated by Sweden Herald

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