China's government just set a new record—and not the kind that usually excites investors. The country's budget deficit for the first four months of 2025 surged to 2.65 trillion yuan ($367 billion), the highest ever for that stretch. This isn't just another line item—it's a clear signal that Beijing went full throttle on fiscal stimulus to cushion the economy as U.S. tariffs jumped to 145% before a recent trade truce. Total spending rose 7.2% to 11.97 trillion yuan, while revenue, once under pressure, showed signs of stabilizing with just a 1.3% year-on-year dip.
So what does that mean for investors? The big push appears to be behind us. After the truce with Washington and better-than-expected April economic data, major banks are already dialing back expectations for more stimulus. China's leadership may now be shifting from crisis-fighting mode to cautious monitoring. Zhaopeng Xing, strategist at ANZ, summed it up: “Government spending was accelerating while revenue shows signs of stabilization. The need for expanding fiscal deficit in the middle of the year has declined.”
If you're betting on Chinese equities, infrastructure names, or commodities, here's the takeaway: Don't count on another fiscal bazooka just yet. The early-year stimulus has already done some heavy lifting. From here, markets may need to stand on their own—at least until the next policy pivot.
