China has unveiled a raft of financial support measures ahead of key trade talks with the United States this weekend as part of an updated stimulus package designed to stabilise markets and sustain an economic recovery amid tariff pressures.
A key policy is the People’s Bank of China (PBOC) cutting the reserve ratio by 0.5% and its monetary policy rate 10 basis points down to 1.4%.
PBOC Governor Pan Gongsheng said the move is expected to provide the financial market with roughly 1 trillion yuan (US$138.9 billion) in long-term liquidity.
More financial support will be given to sectors including tech innovation, service consumption and elderly care via relending; with relending rates lowered by 0.25% from Wednesday, the central bank said.
"The foundation for China's sustained economic recovery needs to be further consolidated, and the country faces an increasing impact from external shocks," the CCP said.
Pan said policy decisions will steadily lower overall social financing costs, boost market confidence, and effectively support the stable expansion of the real economy.
The China Securities Regulatory Commission (CSRC) will aim to keep capital markets stable and active by helping listed companies affected by tariffs cope with macroeconomic challenges.
Listed companies will receive support in “using various finance instruments such as equities, bonds and real estate investment trusts (REITs) to conduct direct financing and encourage eligible domestic enterprises to pursue overseas listings”, CSRC head Wu Qing said.
The Securities, Funds and Insurance Swap Facility (SFISF), with an initial scale of 500 billion yuan, and the 300-billion-yuan relending facility that supports stock buybacks and shareholding increases, will be operated under a shared quota of 800 billion yuan from Wednesday onwards.
"We have solid economic fundamentals, sound macro policies, and reliable institutional guarantees, all injecting much-needed certainty into China's economy and capital markets amid global uncertainties," Wu said.
Property boost
Loans to-date approved for China's "white list" real estate projects have reached 6.7 trillion yuan for the construction of >16 million homes - stemming from the property sector downturn.
The Chinese government has also decided to lower interest rates on personal housing fund loans by 0.25% starting today, which is expected to save homeowners more than 20 billion yuan per year in interest payments.
When questioned on the news, United States President Donald Trump said he was unwilling to pre-emptively lower tariffs on China ahead of negotiations.
