China could run its largest fiscal deficit in a half-century
Reuters reports that China is expected to increase its budget deficit to about 3% of GDP from a target of 2.3% this year. The extra spending is to cushion the economy against the impact of structural reforms, according to 'policy advisors'.
"Next year's budget deficit ratio is very likely to rise to 3 percent or slightly higher, and we cannot rule out the possibility of continued rises in the next several years," said a source at the finance ministry.
That's bullish for commodities, commodity currencies and even moreso for Chinese equities. The flipside of Chinese stimulus is that it tends to raise questions about how bad things really are.
