From outward spending, China is set to re-focus its spending solely on home concerns, following the US' decision to impose tariffs and trade restrictions.
On Monday, the State Council-according to SCMP-said that it had a fiscal policy in place that would allow the government to raise more money to spend locally; the amount would be about 1.35 trillion yuan ($199 billion USD) to be spent for projects and other expenses at home, mostly on infrastructure and the betterment of the people.
The policies have been discussed, among others, during the annual State Council meeting, convened before the Party's regular Politburo gathering. The efforts are designated to help ease the pressure coming from the US' policies regarding trade and the tariffs bestowed on certain exports that China gets most of its finances from.
Financial Times weighs in on the unenviable position that China is in. In an analysis, the Chinese situation is akin to a remark made by Herbert Stein, US chief economic adviser under two presidents-Richard Nixon and Gerald Ford. In that remark, it is obviously shown that a thing that 'can't go on forever' will definitely come to a halt.
The export problems that they are currently facing are the least of China's worries. While they are spending more on extending their inclusive financial policies abroad, the trouble lies with their expenses back home. Will the tariffs be the beginning of China's debt troubles, most of which crew during the 2008 Financial Crisis?
Investments can't help the surging debt that China has incurred in the past, and they could get some more of it if they will try and buffer their people from the possible fallout of a prolonged US trade war. Even so, Chinese president Xi Jinping seems to be one of the only persons who are able to stop the implosion.
Despite the debt, China has enough to draw from. Money that could be used for investments and inviting foreign businessmen to invest is instead redirected toward the homeland, providing a stimulus that helps the economy survive the tariff-like how China did it during 2008.
