S&P/ASX 200 Index (ASX: XJO) mining shares are in the spotlight today.
In early morning trade today, the Fortescue Ltd (ASX: FMG) share price is up 0.8%, Rio Tinto Ltd (ASX: RIO) shares are down 1.7%, and the BHP Group Ltd (ASX: BHP) share price is down 0.4%.
For some context, the ASX 200 is down 0.4% at this same time.
This comes as the iron ore price dipped 1.1% overnight to US$99.70 per tonne.
While the ASX 200 mining shares are increasing their focus on copper, iron ore remains their number one revenue earner. Which goes a long way to explaining their underperformance over the past year, with all three reporting declining revenues as iron ore prices fell from nearly US$120 per tonne last May.
Despite a rough patch these past few weeks, the ASX 200 is up 4.8% over 12 months.
As for the big three Aussie mining stocks:
- BHP shares are down 11.2%
- Rio Tinto shares are down 6.6%
- Fortescue shares are down 37.6%
Which brings us to the big announcement.
Can China rekindle a bull run for the ASX 200 mining shares?
China is the world's second-largest economy. It is the world's top consumer of iron ore. And the nation counts as Australia's top export market.
So, while potential US tariffs on Australian aluminium are noteworthy, if you're buying ASX 200 mining shares, it pays to keep a close eye on what's happening in the Middle Kingdom.
On that front, yesterday, China looked ready to confront any trade war with US President Donald Trump head-on.
Premier Li Qiang announced a 2025 economic growth target of 5% coupled with a fiscal deficit target of 9.9% of China's GDP. That's the highest deficit level in more than 30 years, as the growth policy will likely require significantly more stimulus over the year.
While the focus of Li's speech was to increase consumption, importantly for ASX 200 mining shares like BHP, Rio Tinto and Fortescue, China's government also said it will increase special bonds sales to boost infrastructure spending.
And infrastructure, as you likely know, is a steel-hungry sector.
What are the experts saying?
Commenting on China's announcement that could offer longer-term tailwinds for ASX 200 mining shares, Raymond Yeung, chief economist for Greater China at ANZ Group Holdings Ltd (ASX: ANZ), said (quoted by Bloomberg):
This number reflects authorities are determined to support growth against the backdrop of external uncertainties and trade tensions with the US. It's an ambitious growth target, and it means the authorities will still need to support growth.
Bloomberg economists Chang Shu, Eric Zhu, and David Qu added:
China's resolve to keep growth going is loud and clear, with policymakers planning a record budget deficit and setting targets for 5% GDP expansion and 2% CPI inflation in 2025 — goals that will require considerable policy support to achieve.
The macro objectives are also coupled with additional capital for banks and continued debt relief for local governments, which should help to improve policy traction.
