BEIJING (AP) — China has announced a series of measures aimed at mitigating the economic impact of the trade war with the U.S., as both nations prepare for upcoming talks. The central bank governor and other financial officials have proposed cutting interest rates and reducing bank reserve requirements to boost lending. Additional funds will be allocated for factory upgrades, innovation, and elder care services.
U.S. tariffs, reaching up to 145%, have affected China’s export-driven economy, which is already under pressure due to a slowdown in the property sector. In response, China has imposed tariffs of up to 125% on U.S. goods and ceased purchasing most American agricultural products. Talks between Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng are scheduled in Geneva, Switzerland.
Foreign Ministry spokesperson Lin Jian stated that the meeting was requested by the U.S., emphasizing that any coercion against China would not succeed. Economists at ANZ Research noted that China’s leaders are providing a ‘policy buffer’ for exporters ahead of negotiations. Both economies show signs of strain following a surge in activity as companies and consumers rushed to avoid tariff hikes.
While the meetings may reduce current high tariff levels, a lasting resolution remains uncertain due to the complexity of bilateral issues. Among the measures announced by China: the reverse repo rate was reduced to 1.4%, the PBOC’s lending rate cut by 0.25 percentage points, and the required reserve ratio decreased by 0.5%, freeing up approximately $137.6 billion. Financial markets initially reacted positively to the news but later waned. Analysts note that easing lending conditions alone may not address the lack of consumer and business demand.
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