Xi Prepares to Unveil China Stimulus Plan as Trade War Heats Up

President Xi Jinping heads into China’s biggest political huddle of the year with his economy finally getting back some swagger. Donald Trump’s rising tariffs will test Beijing’s ability to sustain that momentum.

Breakthroughs in artificial intelligence and Xi’s recent embrace of private entrepreneurs such as Alibaba’s Jack Ma have driven a blistering equity rally ahead of the National People’s Congress. But that optimism is already being tainted, with Trump’s latest 10% tariff set to take effect just one day before Premier Li Qiang lays out China’s economic blueprint for the year.

Thousands of delegates including ministry chiefs and provincial leaders will gather Wednesday in Beijing for the parliamentary conclave, where officials will set a bullish growth goal of around 5%.

To get there, policymakers are expected to push China’s official budget deficit target to the highest in over three decades, pumping trillions of yuan into a system battling deflation, a property crash and now a trade war with the US.

Currency traders are watching closely for stimulus details as authorities have been focusing more on keeping the yuan stable than on easing policy. The People’s Bank of China has consistently set the fixing rate above 7.2 per dollar, pushing back against speculation that China might devalue its currency to offset economic losses from the trade war.

Source: FINANCE.YAHOO