Finance
China gears up for big week ahead of U.S. elections, stimulus hopes
A flag stall at the Yiwu Wholesale Market in Zhejiang province, China, on May 10, 2019.
Aly Song | Reuters
BEIJING — The size of China’s highly anticipated stimulus plans will likely depend on the outcome of the U.S. presidential election, analysts said.
Investors expect Beijing to announce details on fiscal support Friday. That’s when the standing committee of the National People’s Congress — China’s parliament — is due to wrap up a five-day meeting. The same gathering last year oversaw a rare increase in the fiscal deficit.
This year, the meeting’s timing means any details will be out just days after the U.S. has voted Republican nominee Donald Trump or Democrat rival Kamala Harris in as the next president. Polls are set to close Tuesday local time.
“The size of China’s fiscal stimulus package would be around 10~20% bigger under a Trump win than under the scenario of a Harris win,” Ting Lu, chief China economist at Nomura, said in a note last week.
He cautioned that most of China’s challenges are domestic, though there will be some impact from the U.S. election result.
Trump has threatened to raise tariffs on U.S. imports from China by 60% — or reportedly by even 200% in an extreme scenario. Harris, currently vice president, has not yet signaled a major departure from the Biden administration’s approach of restricting China’s access to advanced technology.
More tariffs would hit China’s exports, a bright spot in an economy grappling with a real estate slump and tepid consumer demand.
Increased trade restrictions would require China to rely more on domestic demand to boost growth, Zhu Bin, chief economist of Nanhua Futures, said in a video presentation last week. That’s according to a CNBC translation of his Mandarin-language comments.
“Without question we can be certain of one thing — if Trump wins the election, China’s domestic stimulus will only be larger, not smaller,” Zhu said. He expects Trump has a greater chance of winning, which he said would increase downward pressure on the Chinese yuan versus the U.S. dollar.
Political analysts debate whether China’s relations with the U.S. would be better under Trump or Harris.
“I think at this point, probably from China’s view, a potential president Harris [makes it] easier to expect what policies likely come,” said Liqian Ren, leader of quantitative investment at WisdomTree.
That doesn’t mean Beijing will embark on large-scale support. Chinese authorities are “constrained by the U.S.-China competition, so the priority number one is to be able to upgrade technology across the board,” She said. “I think as long as that’s your goal then the government’s willingness to stimulate is still going to be lukewarm.”
Ren expects the scale of stimulus will be determined not by who wins the election, but the stock market reaction.
Market volatility in China, but not the United states, is likely to make “China feel more obligated to counter this volatility,” she said. In contrast to three or four years ago, Ren said, Chinese stock market volatility today has a greater impact on economic confidence.
Chinese stocks have tempered their gains in recent weeks after surging in late September. Chinese President Xi Jinping on Sept. 26 led a high-level meeting calling for strengthening fiscal and monetary policy support, and halting the decline in real estate.
While the People’s Bank of China has cut interest rates, the Ministry of Finance has yet to release details on widely anticipated fiscal stimulus. Finance Minister Lan Fo’an last month hinted at an increase in the deficit, and indicated any changes needed to undergo an approval process before being announced.
How large？
Analyst forecasts for additional debt issuance vary. China is considering more than 10 trillion yuan in debt issuance over a few years, Reuters reported Tuesday, citing sources.
Chinese authorities may not announce a specific number, but if they do, it should be more than 4 trillion yuan, given that was the amount issued in the wake of the 2008 financial crisis, said Zong Liang, chief researcher at Bank of China. He expects the deficit could be expanded beyond 4%.
The Chinese government set a deficit target of 3% for this year, after increasing it to 3.8% late last year.
WisdomTree’s Ren said her analysis of official statements, media reports and investment notes revealed that stimulus expectations are inherently about the same. Whether it is 10 trillion yuan over three to five years, or 2 trillion yuan in one year, the average is about 2 trillion yuan in support a year, she pointed out.
Consumption still in question
“I think people right now are focusing a lot on the topline number,” Ren said. “But they are missing [how] the local government, they are doing a lot of things that are actually counter[ing] stimulus.”
She noted how local authorities have so strictly enforced tax collection in some areas that they have discouraged business activity. Despite some central government support, she said, she expects it will “probably be quite a while” before local authorities “feel they have the cash to spend.”
Dozens of companies in China this year disclosed in stock exchange filings that they have received notices from local authorities to pay back taxes tied to operations as far back as 1994. Local governments once relied on land sales to real estate developers for revenue.
The finance ministry has emphasized its focus on addressing local government debt problems. Analysts have pointed out how additional stimulus will also likely go toward banks, not direct handouts to consumers.
Consumption stimulus may come more from property support at this stage, Citi analysts said in a report Friday. “Having said that, we believe more decisive consumption support could still be a realistic option under more adverse tariff scenarios.”
People watch as Berkshire Hathaway chairman Warren Buffett is seen on a screen speaking at the Berkshire Hathaway Inc annual shareholders’ meeting, in Omaha, Nebraska, U.S., May 3, 2025.
Brendan McDermid | Reuters
Berkshire Hathaway shares are hanging on solidly Monday as investors process Warren Buffett‘s surprise announcement to step down and envision a new path for the conglomerate after his legendary 60-year run.
Buffett, 94, picked the very last moment at Berkshire’s annual meeting in Omaha, Nebraska, to tell his loyal shareholders that it’s time for Greg Abel, vice chairman of non-insurance operations, to replace him as CEO. The board voted unanimously on Sunday to make Abel president and CEO on Jan. 1, 2026, and for Buffett to remain as chairman.
Class B shares fell 2.9% in premarket trading Monday after hitting an all-time high at $539.80 Friday. Class A shares dropped 2.8% after closing at a record high at $809,350 apiece. Berkshire issued Class B shares in 1996 at a price equal to one-thirtieth of a Class A share. In 2010, Berkshire Class B shares split 50-for-1.
“Shareholders should welcome this transparent transition, but also have confidence that Warren isn’t going anywhere,” said Macrae Sykes, portfolio manager at Gabelli Funds and a Berkshire shareholder. “Retaining the position of Chairman means he can continue to mentor Greg and the Berkshire leaders, while also providing additional intellectual capacity when the inevitable time for more major capital allocation occurs.”
It marks an end of an epic era for Berkshire, which was a failing New England textile mill six decades ago when Buffett used an investment partnership he ran to take control. Berkshire has grown into a one-of-a-kind juggernaut worth nearly $1.2 trillion with businesses encompassing insurance, railroad, retail, manufacturing and energy. Buffett is handing over his reins on a particularly high note as Berkshire shares just reached a new peak Friday.
Berkshire Hathaway Class B shares
“Buffett leaves a company that is less reliant on his investing capabilities, with an array of leading businesses with strong cash flows,” Brian Meredith, UBS’ Berkshire analyst, said in a note. “Operationally, we expect little change at BRK and the culture/strategy to remain unchanged under Abel.”
The stock could also be reacting to Berkshire’s first-quarter results that showed a 14% decline in operating earnings, driven by a 48.6% plunge in insurance-underwriting profit. Berkshire said the Southern California wildfires led to a $1.1 billion loss during the period.
Berkshire shares have significantly outperformed the S&P 500, rising nearly 19% this year. Investors seeking relatively safe places to hide find Berkshire appealing because of the defensive nature of its huge insurance empire and the conglomerate’s unmatched balance sheet.
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