BEIJING (AP) – China announced a barrier of measures intended to counter the blow to its economy of the trade war by the American president Donald Trump, while the two parties were preparing for discussions later this week.
The Governor of the Central Bank of Beijing and other senior financial officials described the plans on Wednesday to reduce interest rates and reduce bank reserve requirements to help release more loans for loans. They also said that the government would increase the amount of money available for factory upgrades and other innovations and for care for the elderly and other service companies.
Watch live: The president of the Fed Powell holds a press conference after the interest rate decision
Trump’s prices, up to 145% on imports from China, began to wreak havoc on its economy dependent on export at a time when it is already under the pressure of prolonged slowdown in the real estate sector. China retaliated with pricing increases up to 125% on American products and has stopped buying most American agricultural products.
Later on Tuesday, China and the United States announced plans for talks between the Treasury Secretary Scott Bessent, the commercial representative of the United States Jamieson Greer and the Chinese Vice-Minister He Lifeng later this week in Geneva, Switzerland.
The agreement to speak comes at a time when the two parties remained cattle, at least in public, not to compromise the prices.
“The United States has recently expressed the desire to negotiate with China. This meeting takes place at the request of the American party,” the spokesman for the Ministry of Foreign Affairs, Lin Jian, told journalists in Beijing.
Watch live: The Treasury Secretary, Bessent, testifies to the international financial system in the midst of commercial wars
“Any form of pressure or coercion against China will not work,” said Lin. “China will firmly protect its legitimate interests and maintain international equity and justice. Please listen to the specific details of the dialogue. ”
By softening credit, Chinese leaders provide a “policy stamp” to exporters while Beijing is preparing for talks, the Anz Research economists said in a report.
“The authorities are ready to have prolonged negotiations and a strong position against protectionism,” said the report.
American and Chinese economies have shown signs of tension, after an activity of activity while businesses and consumers rushed to beat the price increases.
Find out more: China says it is open to commercial talks, but high prices remain an obstacle
Meetings in Switzerland could offer both parties the opportunity to compose the current prohibitive rate level, which Bessent has described as unsustainable, while working on an agreement. But the process is likely to take time.
“A sustainable resolution remains elusive, in our opinion, given the large range of problems in the bilateral relationship,” said Morgan Stanley in a comment.
The US economy contracted 0.3% in January-March. The Chinese economy increased at an annual rate of 5.4% in the first quarter of the year, while factories increased production to fill a peak in orders. But economists question the validity of statistics, and more recent reports show a deterioration in new export orders and the feeling of companies.
Among the support measures announced Wednesday by China:
- The Governor of Banque Populaire de China, Pan Gongsheng, said that the China’s resettlement rate, the rate on the deposits of commercial banks from the Central Bank, was reduced to 1.4% by 1.5%.
- The PBOC loan rate to commercial banks was reduced by 0.25 percentage points to 1.5%.
- The reserve ratio required, or part of the funds that banks must hold in their reserves, have been reduced by 0.5%. Pan said it would release 1 Yuan Billion ($ 137.6 billion) in additional cash.
- The central bank has also reduced interest rates on housing loans over five years.
The financial markets were in shock because the two largest economies in the world remained involved in the commercial impasse.
The news of the additional increase in the economy and markets, as well as the plans for the commercial negotiations of China-United States, initially increased the share price in Hong Kong and Shanghai early on Wednesday. Shanghai’s reference composite index was built on these earnings, but the rally was in Hong Kong.
A key factor causing the economy is the lack of demand from consumers and businesses, and the relaxation of loan conditions will not necessarily change that Julian Evans-Pritchard of the capital economy said in a report, adding that “today’s movements do not replace the expansion of financial support”.
Support PBS News Hour
Your tax deductible donation guarantees that our vital reports continue to prosper.
