- China may cut reserve ratio and policy rates to cushion economic impact of US tariffs.
- Beijing responds with 34% tariff on all US imports and export restrictions on rare earths.
- Chinese government pledges strong domestic stimulus and industry support to weather trade shocks.
- China warns US may face greater disruption due to dependence on Chinese goods and materials.
Beijing, April 7, 2025 – In a bold response to mounting trade pressure from the United States, China’s top policymakers have signaled their readiness to deploy a broad array of economic tools, including monetary easing and fiscal expansion, to safeguard the country’s growth trajectory.
The People’s Daily, the official mouthpiece of the Communist Party, outlined a sweeping set of potential interventions in a front-page commentary Monday, suggesting that the People’s Bank of China could cut reserve requirement ratios (RRRs) and policy interest rates “at any time” to counteract the economic strain from new US tariffs.
“There is still room for further expansion of the fiscal deficit, special treasury bonds and special debts,” the article stated, underlining the government’s intent to maintain macroeconomic stability.
The move follows President Xi Jinping’s retaliatory announcement last Friday of a 34% tariff on all imports from the United States, matching President Donald Trump’s reciprocal tariffs on Chinese products. In addition, Beijing imposed immediate export restrictions on seven types of rare earth elements, a strategic resource vital to global electronics and clean energy supply chains.
As US tariffs are set to raise levies on nearly all Chinese goods to a minimum of 54%, concerns are rising over the potential hit to China’s export sector, which had shown signs of recovery entering 2025. The People’s Daily commentary admitted the new tariffs “will significantly suppress bilateral trade,” adding downward pressure to the broader economy.
However, Chinese authorities remain confident, with Xinhua News Agency reaffirming that Beijing “will take resolute measures” to protect national interests. The article argued the US could ultimately suffer more damage, given its high reliance on Chinese consumer goods and industrial components.
In a show of domestic resilience, the government outlined plans to stimulate domestic consumption, stabilize capital markets, and support impacted industries through targeted policy and financial assistance. Officials are also guiding Chinese firms to diversify export markets and adjust supply chains to reduce exposure to US trade risks.
While economic headwinds are intensifying, Beijing appears firmly committed to managing the turbulence with a proactive policy mix, reinforcing confidence among investors and businesses that China has the capacity and intent to maintain growth despite external shocks.
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