China Boosts Budget Spending to Counter Trump Tariffs

China has extended its state spending in the first quarter of 2025, strengthening its economy as it braces for a decline in external demand amid escalating trade tensions with the U.S. The general public budget expenditures and the state fund account, the two main fiscal books of China, increased to 9.26 trillion yuan (1.3 trillion USD) in the first three months of 2025, marking a 5.6% increase compared to the same period last year, according to Bloomberg calculations based on data released by the Ministry of Finance today (April 18, 2025). This marks the strongest increase for the first quarter in the past three years. Nearly 22% of the planned annual expenses were spent during this period, faster than the 21.6% at the same time last year. China must bolster public spending to shield its economy as the imposition of U.S. tariffs could lead to a contraction in exports, compounded by a multi-year real estate market slump and ongoing deflation, which continue to weaken consumer and business sentiment. Growth remained steady in January-March but economists generally expect a sharp slowdown from the second quarter onward, once the wave of forward export momentum subsides and the benefits from a consumer product exchange program diminish. Faster tax rebate disbursements have been cited by some analysts as a way to offset some pressure on exporters caused by U.S. tariffs. Payments as a percentage of exports last month rose to 11%, slightly higher than the level from a year ago, according to Bloomberg calculations based on official data.