Analysis: How China Could Cushion a Trade Shock With Fiscal Policy

As trade turbulence escalates, China’s fiscal policymakers face the dual challenge of bolstering domestic demand while maintaining sound public finances.

The imposition of tariffs by the U.S. in early April and China’s reciprocal measures have opened a new chapter of economic uncertainty. While the situation remains fluid, it is increasingly unlikely that trade activity between the two countries will revert to pre-April levels in the near term.