China Ran Record Budget Deficit With Spending Blitz Amid Tariffs
(Bloomberg) -- China's fiscal stimulus pushed its four-month budget deficit to a record high, as the government ramped up support for the economy during an escalation in its trade conflict with the US.
America, 'Nation of Porches'
NJ Transit Train Engineers Strike, Disrupting Travel to NYC
NJ Transit Makes Deal With Engineers, Ending Three-Day Strike
The broad deficit reached 2.65 trillion yuan ($367 billion) in January-April, the most ever for the period, according to Bloomberg calculations based on data released by the Finance Ministry on Tuesday. The shortfall swelled by more than 50% compared with a year earlier.
It's the clearest evidence yet that Beijing shifted into a higher gear in deploying this year's planned fiscal stimulus to help the economy weather external shocks. US tariffs on most Chinese goods rose to a prohibitively high level of 145% in April before the two countries agreed to a truce earlier this month.
Outlays soared against the backdrop of stabilizing earnings. Total income in China's two main fiscal books reached 9.32 trillion yuan in January-April, a decline of only 1.3% year-on-year after a much steeper drop during the first quarter.
Total expenditure rose 7.2% to 11.97 trillion yuan, the data showed. That number combines spending under the general budget, which includes mainly everyday outlays, with expenditure in the government fund budget, which is more weighted toward capital investment projects.
Looking ahead, the urgency of further fiscal support is waning after an agreement by China and the US to temporarily lower tariffs levied against each other's products.
The truce, along with decent economic activity numbers for April, has led a few major international banks to raise their forecasts for China's growth this year and dial back expectations of additional stimulus by the government.
Tuesday's fiscal figures have given them more reasons to bet on the government delaying new supportive measures.
'Government spending was accelerating while revenue shows signs of stabilization,' said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. 'The need for expanding fiscal deficit in the middle of the year has declined.'
Why Apple Still Hasn't Cracked AI
Anthropic Is Trying to Win the AI Race Without Losing Its Soul
Microsoft's CEO on How AI Will Remake Every Company, Including His
Cartoon Network's Last Gasp
DeepSeek's 'Tech Madman' Founder Is Threatening US Dominance in AI Race
©2025 Bloomberg L.P.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
32 minutes ago
- Yahoo
Labubu-maker Pop Mart diversifies into jewellery with new concept store
By Casey Hall and Nicoco Chan SHANGHAI (Reuters) -"Blind box" toymaker Pop Mart, which has seen frenzied sales worldwide for products related to its ugly-cute Labubu character, opened its first jewellery store in Shanghai on Friday. The jewellery concept store, called Popop, sells accessories adorned with Pop Mart's top-selling characters, including Labubu, Molly and Skullpanda. While Chinese consumption remains subdued in the face of a prolonged property downturn and sluggish economy, Pop Mart's affordable and adorable toys have remained in high demand both at home and abroad, driving its share price up more than 200% so far this year. Investor Zhang Ming, 34, who owns Pop Mart stocks worth 100 million yuan ($13.92 million), flew from his base in the southwestern Chinese city of Chongqing for the opening to check out the new store type and decide whether to increase his shareholding in the company. "I believe that the pricing and target audience for this brand are particularly well-suited, and I am confident that Pop Mart could potentially become China's version of Disney," Zhang said, predicting that the company's market cap could double from its current $45.65 billion valuation. Along with some Disney characters and others related to anime, comics and popular video games, Pop Mart's characters are seen as fulfilling what has been called "emotional consumption", which sees young consumers spend on affordable luxuries that bring joy into their lives. Fang Ke, 35, who has a birthday coming up this month decided to treat herself to a 699 yuan Labubu bracelet at the opening. "I've loved Pop Mart for a long time; it's good-looking, brightly coloured, and also has a visual impact," she said. "My daughter likes it too." At Popop, prices start at around 350 yuan for charms or a simple silver ring, and go as high as 2699 yuan for necklaces adorned with metallic models of the characters. Most pieces are priced at under 1,000 yuan. At a traditional Pop Mart store, the "blind box" toys that the chain is best known for generally sell for 69 yuan and up, but consumers have shown a willingness to shell out much more for limited editions. Earlier this week, a Beijing auction house sold a human-sized Labubu figure for 1.08 million yuan, setting a new record and marking the toy's switch from craze to collectible. ($1 = 7.1821 Chinese yuan renminbi)
Yahoo
41 minutes ago
- Yahoo
Apple's Siri Struggle: New Report Explains What Went Wrong
PCMag editors select and review products independently. If you buy through affiliate links, we may earn commissions, which help support our testing. A lot has been said about Siri in the past year after Apple failed to deliver on its promise of a supercharged voice assistant. Multiple delays and lawsuits later, we now have details on what went wrong at Cupertino. According to Bloomberg's Mark Gurman, Apple rushed the development of its AI features after OpenAI's ChatGPT launched in 2022. Things began falling apart when the team tried merging Siri's old code with the new one. Sources tell Gurman that Apple had no plans to launch Apple Intelligence until ChatGPT arrived. Apple's software chief, Craig Federighi, realized the chatbot's potential a month after its launch when he used it to write code for a personal project. Soon, Federighi, along with Apple's then AI head, John Giannandrea, and a few other executives, started meeting with OpenAI, Anthropic, and other AI companies to learn more about these AI models. Federighi also told his team that iOS 18 should infuse as many AI-powered features into an iPhone as possible. Giannandrea then assembled a team and started working on building large language models (LLMs) for AI features. However, as Apple inched closer to Apple Intelligence's public reveal in June 2024, internal tests showed that the chatbot lagged significantly behind ChatGPT, with OpenAI's product delivering 25% better accuracy. The desperate need for AI forced Apple to look for partners. For stronger user privacy, Giannandrea suggested Google, but Apple announced OpenAI as its first AI partner at WWDC 24. Many AI-powered features were announced at the June event, including the ability to summon ChatGPT for requests Siri can't fulfill. A delay pushed that feature to December 2024, but many others that were announced are still MIA, resulting in lawsuits and a new chapter in Apple's ever-growing Siri struggles. Some Apple Intelligence features were too buggy when Federighi started testing them on his personal phone before iOS 18.4. Worse, the communication between Apple's product development and marketing teams was poor. Apple had to pull down TV ads for iPhone 16 features that were nowhere close to being ready. Internally, Giannandrea has absorbed much of the blame for Siri's failure. Several employees claim that Giannandrea lacked urgency for generative AI; another Apple executive says Giannandrea believed consumers don't trust it enough and that AI agents are far away from replacing humans, Bloomberg reports. The exec has blamed overhyped marketing. CEO Tim Cook eventually lost faith in Giannandrea and replaced him with Vision Pro's head, Mike Rockwell, in March. Aside from these issues, Siri's code was seen to have a major technical flaw. To add AI features, Apple engineers split Siri's infrastructure in half. When they tried to merge Siri's new AI features with legacy features, such as setting the alarm, things started falling apart. A team in Zurich is now creating a new software architecture built entirely on an LLM-based engine, called LLM Siri. Their aim is to make Siri more conversational and better at processing information. In the EU, Apple will also let users replace Siri with third-party assistants, according to a source. According to an earlier New York Times report, some of Siri's announced but unreleased features are expected this fall. Meanwhile, Apple is prepping for a huge iOS revamp scheduled for WWDC 25 next month.
Yahoo
42 minutes ago
- Yahoo
Exclusive-India moves to conserve its rare earths, seeks halt to Japan exports, sources say
By Neha Arora and Aditi Shah NEW DELHI (Reuters) -India has asked state-run miner IREL to suspend a 13-year-old agreement on rare earth exports to Japan and to safeguard supplies for domestic needs, two sources familiar with the matter told Reuters, aiming to reduce India's dependence on China. IREL also wants to develop India's capacity for rare earth processing, which is dominated globally by China and has become a weapon in escalating trade wars. China has curbed its rare earth materials exports since April, pressuring automakers and high-tech manufacturers worldwide. In a recent meeting with auto and other industry executives, Indian Commerce Minister Piyush Goyal asked IREL to stop its exports of rare earths, mainly neodymium, a key material used in magnets for electric vehicle motors, one of the sources said. The Commerce Ministry, IREL and the Department of Atomic Energy, which oversees IREL, did not immediately respond to requests for comment. The sources declined to be identified because of the sensitivity of the matter. Under a 2012 government agreement, IREL supplies rare earths to Toyotsu Rare Earths India, a unit of Japanese trading house Toyota Tsusho, which processes them for export to Japan where they are used to make magnets. In 2024, Toyotsu shipped more than 1,000 metric tons of rare earth materials to Japan, commercially available customs data showed. That is one-third of the 2,900 tons mined by IREL, although Japan relies mainly on China for its rare earths supply. Toyota Tsusho and Toyotsu did not immediately respond to requests for comment. IREL has been exporting rare earths due to a lack of domestic processing capacity, but following the recent disruptions to supplies of Chinese material it wants to keep its rare earths at home and expand domestic mining and processing, a second source said, adding that IREL is awaiting statutory clearances at four mines. However, India may not immediately be able to stop supplies to Japan because they fall under a bilateral government agreement, the person said. IREL wants this to be "amicably decided and negotiated because Japan is a friendly nation", the person added. Japan's Trade Ministry said in a statement to Reuters: "We would like to refrain from answering questions about bilateral exchanges in general, not just about this matter." EXPANSION PLANS China's recent export controls on rare earth materials have rocked the global auto industry, which has warned of supply chain disruptions and production halts. China also weaponised its supplies in 2010, when it briefly stopped shipments to Japan. That prompted the Japanese to turn to India for rare earths. India has the world's fifth-largest rare earth reserves, at 6.9 million metric tons, but there is no domestic magnet production. India relies on imported magnets, mainly from China. In the fiscal year to March 2025, India imported 53,748 metric tons of rare earth magnets, government data showed. These are used in automobiles, wind turbines, medical devices and other manufactured goods. Rare earth mining is restricted to IREL, which supplies India's Atomic Energy Department with materials for nuclear power projects and defence-related applications. India lacks wide-scale technology and infrastructure to mine rare earths, and the development of any commercially viable domestic supply chain is years away, analysts said. IREL has a rare earths extraction plant in the eastern Indian state of Odisha and a refining unit in Kerala, in southern India. The miner, founded in 1950, plans to produce 450 metric tons of extracted neodymium in the fiscal year to March 2026 with a plan to double that by 2030, the second person said. It is also looking for a corporate partner for the production of rare earth magnets for the auto and pharmaceutical industries, the person said. India is firming up plans for incentives to companies to set up rare earth processing and magnet production facilities to meet local demand, people familiar with the matter told Reuters earlier this month. Sign in to access your portfolio
