The current institutional setting in the United States and the style of presidential policymaking meant that fiscal discipline was unlikely to have a direct impact in the near term, added Huang, who is also the dean of the National School of Development at Peking University.
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A member of the monetary policy committee at the People’s Bank of China, Huang raised the issue with Harvard professor Jason Furman at an academic forum on the Chinese and American economies, organised by the East Asian Institute at the National University of Singapore.
Furman agreed that the US fiscal outlook was troubling, saying the deficit was “clearly too large” and that the country’s debt trajectory had been on an increasingly “unsustainable path”.
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He added that if the US were to reduce its budget deficit, about half of the adjustment would likely show up in the current account. Otherwise, raising savings or curbing import consumption would require weaker economic activity, he said.
US government debt rose to US$38.4 trillion by the end of 2025, an increase of about US$2.23 trillion from a year earlier, according to the latest data from the US Congress Joint Economic Committee.
