China’s central bank announced on Friday that it will encourage financial institutions to increase support for consumption and foreign trade, in response to the ongoing trade conflict with the United States.
This week, Beijing intensified its efforts to mitigate the economic impact of the tariff dispute with Washington, unveiling a series of stimulus measures, including interest rate cuts and significant liquidity injections.
In its first-quarter monetary policy report, the People’s Bank of China (PBOC) stated it will maintain an “appropriately loose” policy stance, adjusting the intensity and pace of measures based on domestic and global economic conditions, as well as financial market developments.
The central bank will guide financial institutions to provide more support for key areas such as consumption, foreign trade, technological innovation, and small businesses.
Additionally, the PBOC plans to use a range of policy tools, including reserve requirements, re-lending, and open market operations, to ensure adequate liquidity in the financial system. It will also employ targeted measures to offer low-cost funding to critical consumption sectors.
The central bank revealed plans to introduce new guidelines for consumption finance, urging banks to focus on sectors like tourism, hospitality, entertainment, education, and household services. It will also boost investment in infrastructure and logistics to support consumption.
In a separate move, the PBOC announced a 500-billion-yuan re-lending facility aimed at boosting elderly care and services consumption.
Finally, the central bank reassured that it would maintain stability in the yuan’s exchange rate and guard against risks of currency volatility.
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