China urged to step up fiscal support amid Iran-Israel war, trade war risks

Beijing should adopt a more proactive fiscal policy in response to rising global uncertainties, particularly following the outbreak of war in the Middle East, a central bank adviser said on Tuesday.

While many Chinese economists agree that fiscal discipline is essential for long-term sustainability, current circumstances may call for a different approach, said Huang Yiping, dean of Peking University’s National School of Development.

“What we see at the moment is rising uncertainties. We are very much worried about deglobalisation, trade, protectionism and so on,” he told a panel at the Summer Davos forum in Tianjin.

“If whatever outside uncertain factors cause a downturn of the domestic economy, I personally would be very much in favour of a proactive fiscal policy.”

Huang’s remarks came amid heightened geopolitical tensions, including recent clashes between Israel and Iran. The conflict has raised concerns about global economic stability, with Tehran threatening to block the Strait of Hormuz – one of the world’s most critical shipping lanes.

On Monday, US President Donald Trump said that Israel and Iran had agreed to a “complete and total ceasefire” set to take effect within 24 hours. Both Iranian state television and the Israeli Prime Minister’s Office confirmed the truce on Tuesday.

South China Morning Post