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The Chinese yuan. Photo: VCG via Getty Images

The Chinese government is spending $199 billion on infrastructure to prop up domestic growth as the trade fight with the U.S. rages on, reports the South China Morning Post.

Why it matters: China is prepared to both retaliate and out-wait the U.S. in a trade war, and it has tools — like upping government spending — to blunt the effects of Trump's tariffs.

The big picture:

  • China has a narrow government deficit — about 2.6% of GDP — compared to the United States', which is estimated to reach 4.2% of GDP. As a result, the Chinese government can massage policies to promote domestic growth as the trade fight escalates.
  • Experts say China may also deliberately devalue the yuan to stave off trade war effects.
  • China is also cutting corporate taxes and increasing loans to businesses, CNN Money reports.

The bottom line: We're unlikely to see either side back down in the trade war any time soon.

Go deeper

13 mins ago - Politics & Policy

Trump revokes ethics order barring former aides from lobbying

Photo: Spencer Platt via Getty

Shortly after pardoning members of Congress and lobbyists convicted on corruption charges, President Trump revoked an executive order barring former officials from lobbying for five years after leaving his administration.

Why it matters: The order, which was signed eight days after he took office, was an attempt to fulfill his campaign promise to “drain the swamp.”

  • But with less than 12 hours left in office, Trump has now removed those limitations on his own aides.

Trump pardons former fundraiser Elliott Broidy

President Trump has pardoned Elliott Broidy, a former top Republican fundraiser who pleaded guilty late last year to conspiring to violate foreign lobbying laws as part of a campaign to sway the administration on behalf of Chinese and Malaysian interests.

Why it matters: Broidy was a deputy finance chair for the Republican National Committee early in Trump’s presidency, and attempted to leverage his influence in the Trump administration on behalf of his clients. The president's decision to pardon Broidy represents one last favor for a prominent political ally.

Trump grants flurry of last-minute pardons

Photo: Jabin Botsford/The Washington Post via Getty Images

President Trump issued 73 pardons and commuted the sentences of 70 individuals, hours from leaving office early Wednesday, hours from leaving office.

Why it matters: It's a last-minute gift to some of the president's loyalists and an evident use of executive power with only hours left of his presidency. Axios reported in December that Trump planned to grant pardons to "every person who ever talked to me."