‘More proactive’ fiscal policy, Trump 2.0 derisking and bringing home the British bacon

Welcome to China in 5, from the British Chamber of Commerce in China.

Each week, we bring you up to speed with what’s caught our eye in the China-sphere in five(ish) minutes.?Grab a coffee, take a break, and dive in!

China Economists Ramp Up Expectations for Rate Cuts and Spending

What’s the background? The Communist Party’s decision-making body, the Politburo, has committed to boosting economic growth through a ‘more proactive’ fiscal policy, shifting from a ‘prudent’ to a ‘moderately loose’ monetary policy approach. While China’s economy has shown signs of revival in recent months following a series of stimulus packages, the long-term outlook remains uncertain due to the threat of a potential second trade war with the US and persistently weak domestic demand. Economists anticipate that the People’s Bank of China will implement significant cuts to the reserve requirement ratio — the amount of cash banks are required to hold in reserves. The Politburo has also proposed introducing ‘extraordinary’ counter-cyclical measures next year for the first time, potentially involving unconventional tools to bolster growth and restore confidence in the economy.

Fact 1:?China has historically maintained its budget deficit ratio at or below 3% of GDP, but at least seven Chinese brokerages forecast that next year’s fiscal deficit target could rise to 4%.

Fact 2: The previous ‘prudent’ approach to monetary policy had been in place for approximately 14 years.

Fact 3: If the policy is implemented, China’s deficit would be the highest in three decades and would result in the deepest interest-rate cuts since 2015.

Despite a series of stimulus measures this year, the Chinese economy has yet to show significant signs of recovery, with threats and uncertainties persisting. The Politburo's shift in monetary policy reflects a willingness to take on deeper debt and financial risks in pursuit of economic growth. In our British Business in China: Sentiment Survey 2024-25, we found growing concerns among British businesses in China regarding economic stability. While ‘China’s economic prospects’ remain the top concern, issues such as the property market and rising operational costs have newly entered the top negative five trends this year. Although detailed policies have yet to be announced, some economists anticipate potential intervention in the property market by the central government. Close attention to upcoming policy changes will be essential. Etsuka Tomonaga Policy Associate, British Chamber of Commerce in China (BritCham China)

British pork producers to bring home the bacon

What’s the background? After Covid-era restrictions halted exports of unprocessed pork to China, the market has now reopened following high-level negotiations during Foreign Secretary David Lammy’s visit to Beijing. The resumption of exports is expected to boost the UK pork industry significantly, with China’s market worth ￡180 million annually prior to the restrictions. This development signals renewed cooperation between the UK and China in the agricultural trade sector. Despite fun media quips such as British companies “bringing home the bacon” and “british sausages back on the menu”, most pork exports to China are cuts which are more popular with British diners than Chinese ones, such as offal and trotters.

Fact 1: China is the UK’s largest non-EU market for pork, with British exports valued at ￡180 million in 2023.

Fact 2: The UK government has suggested that the lifting of restrictions is expected to add around ￡80 million in additional revenue for UK producers.

Fact 3: This breakthrough follows efforts by Defra, the Department for Business and Trade, and industry leaders to restore access to this vital export market, with former Secretary of State Thérèse Coffey having visited the country last year.

The agricultural sector in China often serves as a bellwether for improving relations with third countries, with notable examples from Belgium and Australia. This reopening signals encouraging progress and reflects the potential for deeper UK-China economic engagement. Our members are increasingly optimistic about the bilateral relationship and will welcome these developments. We hope this positive trend not only bolsters the agricultural sector but also opens doors for British businesses in other industries, driving long-term collaboration and growth. A renewed focus on pragmatic dialogue and mutual opportunities will be key to sustaining this momentum. Harry Bell Policy and Advocacy Manager British Chamber of Commerce in China (BritCham China)

Coffee break read: ?The Fiction of Western Unity on China De-Risking

Why we like it: In his Foreign Policy column, James Crabtree examines the growing divergence in Western approaches to China as Donald Trump prepares to re-enter the White House. Whilst the Biden administration framed its China policy around targeted "de-risking," Crabtree highlights that Trump’s administration is likely to push for broader decoupling, potentially upending global trade dynamics. This stance creates challenges for U.S. allies, including Britain, which has been rekindling economic and diplomatic ties with China under its current government. For British businesses, Crabtree’s analysis underscores the need to navigate a complex geopolitical landscape where stronger U.S. restrictions on China could lead to redirected export overcapacity, economic contagion, and demands to align with Washington’s policies. As Britain’s next government determines its China strategy, balancing this pressure with its own interests in maintaining stable trade and investment relationships with Beijing will be crucial.

Podcast of the Week: Is Starmer planning a foreign policy reset too?

This week’s Coffee House Shots dives into Keir Starmer’s foreign and domestic policy ‘reset’, spotlighting his speech at the Lord Mayor’s Banquet, where he dismissed the idea of Britain needing to “pick sides” between the US and EU under a possible Trump presidency. The podcast explores how this balancing act ties into Labour’s push for economic growth, with a visit to China by Foreign Secretary David Lammy and a potential upcoming trip for Chancellor Rachel Reeves. The episode also examines Sir Chris Wormald’s appointment as Cabinet Secretary, questioning whether his domestically focused background matches the UK’s growing geopolitical challenges. With analysis from Jill Rutter, this episode offers a concise look at Labour’s recalibration of Britain’s global and domestic priorities.

...and finally...

If you’re planning to climb one of China’s scenic peaks but can’t find a companion, why not hire a “climbing buddy”? As CNN reports, these guides—often young, fit university students—offer more than just trekking expertise. They’ll carry your bag, plan your route, and even help stage your perfect sunrise photo at the summit. With prices ranging from $30 to $85, good looks and charm can command premium rates. For some, it’s become a lucrative side hustle, earning significantly more than conventional internships. While the trend highlights creativity in a tough job market, questions around safety and regulation remain as the “pei pa” phenomenon climbs in popularity.