China Prepares Economic Stimulus Measures Amid Prolonged Trade Tensions and Monetary Policy Stasis

As global trade conflicts continue to exert pressure on China’s export-driven economy and central banks maintain cautious interest rate policies, Chinese authorities are formulating new fiscal stimulus packages. These measures aim to bolster domestic consumption and industrial activity while navigating persistent external headwinds. The stimulus rollout comes as economic indicators show strain from protracted trade disputes and constrained monetary flexibility in the current financial climate.

China warns allies as U.S. pushes tariff pressure

While Beijing delayed pulling any monetary levers, the trade war escalated. U.S. President Donald Trump, now back in the White House, paused new tariff hikes on other countries for 90 days.

But Washington raised tariffs on Chinese goods to 145%, wanting to squeeze the country even harder. Reports say Trump wants to use these negotiations to pressure allies to scale back business with China.

In response, China’s Ministry of Commerce made it clear they won’t just sit there. They warned that any country that cuts a deal with the U.S. that harms China’s interests will face countermeasures.

“China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures,” the ministry said in a statement.

On top of that, economists from ING said the Loan Prime Rate won’t drop unless the central bank first cuts the seven-day reverse repo rate. That shorter-term rate hasn’t been touched either. ING pointed to low inflation and strong external pressure as good reasons to ease, but added that currency stability might make the People’s Bank of China wait until the U.S. Federal Reserve cuts its own rates before making a move.

Despite the Q1 numbers, markets aren’t buying the hype. Global investment banks have already started slashing their China GDP forecasts for the rest of the year. The worry is that the early export data is fake calm—many companies rushed out shipments before the tariffs hit, so the numbers don’t yet reflect the real damage. That means the storm is still coming, and nobody wants to be caught in it unprepared.

The Ministry of Commerce also warned about a collapse in global trade norms. They said countries were sliding back into a “law of the jungle” where power beats rules. The same statement said China wants to cooperate with others to “defend international fairness and justice,” even as it called out the U.S. for using “unilateral bullying” and abusing tariffs to force its will.

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