MNI BRIEF: China To Add Policy Easing Due To Tariff Headwinds

China will enhance monetary and fiscal efforts to safeguard the economy from the additional U.S. tariffs that will intensify downward economic pressure, according to a commentary by the People’s Daily on Sunday. 

Authorities will deploy monetary policy tools, such as reserve requirement ratio (RRR) cuts and interest-rate reductions as needed, while fiscal policy will intensify expenditure and accelerate spending timelines, with fiscal deficits, special-purpose and special treasury bonds retaining flexibility for further expansion depending on circumstances, it reported. (See MNI: Low Credit Demand Feeds PBOC Easing Caution; Tariffs Key)

Unconventional measures will be deployed to boost domestic consumption, implement policies to stabilise capital markets, support heavily tariff-impacted industries and enterprises to explore domestic and non-U.S. markets, the commentary said. 

The U.S’ imposition of 34% tariffs on Chinese goods, combined with previously levied duties, will severely suppress bilateral trade and negatively impact Chinese exports in the short term, it noted.