In a bid to counteract mounting economic pressures and prepare for key trade discussions, Chinese authorities unveiled a series of stimulus measures, including rate cuts and liquidity injections.
Beijing Moves to Stabilize a Struggling Economy
The latest moves come ahead of a critical meeting in Switzerland between U.S. Treasury Secretary Scott Bessent, trade negotiator Jamieson Greer, and Chinese Vice Premier He Lifeng. The talks mark the first step toward easing long-standing trade tensions.
Recent data showed that China’s factory activity contracted at its fastest pace in over a year, highlighting the toll taken by ongoing tariffs and slowing demand. Concerns over deflation and rising unemployment have increased urgency for domestic support.
Interest Rate Cuts and Reserve Ratio Reductions
Among the key measures, China’s central bank will lower the borrowing cost of its seven-day reverse repo agreements by 10 basis points to 1.40% starting May 8. In addition, the reserve requirement ratio (RRR) for banks will be reduced by 50 basis points on May 15, releasing 1 trillion yuan ($138 billion) into the financial system.
People’s Bank of China Governor Pan Gongsheng stated that this is the first RRR cut since September, aimed at boosting liquidity and economic confidence.
Targeted Support for Key Sectors
Regulators also announced sector-specific measures to shore up the economy. The China Securities Regulatory Commission pledged support for A-share companies affected by tariffs. Insurance firms will also gain expanded investment rights, with an additional 60 billion yuan ($8.31 billion) allocated for stock market participation.
Furthermore, new relending facilities will be established to support purchases of tech-related bonds and investment in elderly care and service consumption. Existing tools for agriculture and small business support will be strengthened.
Analysts See Strategic Timing
Analysts at Citi noted that the stimulus appears “tactical” and aimed at strengthening China’s negotiating position. “Timely domestic support could create more leverage for China,” they wrote.
As markets await the outcome of U.S.-China talks, Beijing’s proactive measures may help stabilize sentiment and signal its readiness to defend economic growth amid global uncertainty.