As America prepares for its election, the standing committee of China’s legislature convened in Beijing for a highly anticipated session. The economic stimulus measures that it approves over the five-day meeting, which began on Monday, will reveal much about the mindset of China’s leaders. The committee is expected to sign off on a package that may recapitalise banks, refinance local-government debt and, perhaps, offer help to households. Investors want to see if policymakers grasp the severity of China’s economic problems—and are willing to spend enough to fix them. The size and nature of the package should provide an answer.
But there is another big question on investors’ minds: what will China do if Mr Trump is elected? He has threatened tariffs of 60% on Chinese goods. These could cut 2.5 percentage points from China’s growth over the subsequent year, says UBS, a bank. If that came to pass, a bolder stimulus would be needed.
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