Beijing plans record budget deficit of 4% in 2025

Sources say the added stimulus is part of preparations to counter expected US tariffs

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BEIJING - Chinese leaders agreed last week to raise the budget deficit to 4 percent of gross domestic product (GDP) in 2025, its highest on record, while maintaining an economic growth target of around 5 percent, two sources with knowledge of the matter said.

The new deficit plan compares with an initial target of 3 percent of GDP for 2024 and is in line with a "more proactive" fiscal policy outlined by leading officials after December's Politburo meeting and last week's Central Economic Work Conference (CEWC), where the targets were agreed but not officially announced.

The additional 1 percentage point of GDP in spending amounts to about 1.3 trillion yuan (S$241 billion). More stimulus will be funded through issuing off-budget special bonds. These targets are usually not announced officially until an annual Parliament meeting in March. They could still change before the legislative session.