China has announced a series of measures aimed at dealing with the economic blow to the trade war by U.S. President Donald Trump as both sides prepare for talks later this week.
Beijing Central Bank governor and other senior financial officials outlined plans to lower interest rates and lower bank reserve requirements on Wednesday to help free up more loan funds.
They also said the government will increase available funds for factory upgrades and other innovations as well as businesses of aged care and other services.
Trump's tariff rate is as high as 145% of Chinese imports and has begun to cause losses to the country's export-dependent economy amid the long-term pressure from the real estate sector. China retaliated against tariffs on U.S. goods at up to 125% and stopped buying most U.S. agricultural products.
Later on Tuesday, China and the United States announced plans to hold talks between Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer and China’s deputy prime minister later this week at LIFENG in Geneva, Switzerland.
U.S. Treasury Secretary Scott Bessent said in an event chaired by the International Finance Institute that the U.S. “continuous over-dependence on consumer demand” is creating an “increasingly balanced” global economy, citing China's export growth economy is a “unsustainable” model.
The agreement is discussed when both parties are still firm, at least when they do not compromise on tariffs in public places.
Foreign Ministry spokesman Lin Jian told reporters in Beijing: “The United States recently expressed its hope to negotiate with China. This meeting is expected to be held by the United States.”
“No form of pressure or coercion against China will work,” Lin said. “China will firmly protect its legitimate interests and safeguard international fairness and justice. Please continue to pay attention to the specific details of the dialogue.”
Both economies show signs of stress
By easing credit, Chinese leaders provide exporters with a “policy buffer” as Beijing prepares for negotiations, economists at ANZ Research said in a report.
“The authorities are ready for lasting negotiations and take a strong stance on protectionism,” the report said.
Chief Political Correspondent Rosemary Barton talks with former U.S. Labor Secretary Robert Reich about possible deals with China and whether President Donald Trump can suspend automatic tariffs to give automakers more time to move to the U.S.
Both the U.S. and Chinese economies show signs of pressure after companies and consumers are rushing to beat tariff hikes.
The Swiss conference could provide both parties with an opportunity to reduce the current high tariffs, which Bessent described as unsustainable, and they described as unsustainable when they reached an agreement. But this process may take time.
“In view of the various issues in bilateral relations, we believe that enduring resolutions remain elusive,” Morgan Stanley said in a comment.
