China is taking proactive steps to mitigate the impact of an impending trade war with the US by implementing monetary measures. The People’s Bank of China announced a series of measures, including a half-point cut to the banks’ reserve requirement ratio, a reduction in the benchmark interest rate, and injecting 1tn yuan into the banking system. In addition, a key interest rate will be cut by 0.1 percentage point. These moves are in response to the uncertain global economy and escalating trade tensions.

China, facing significant tariffs on its exports to the US, is under pressure due to its reliance on exports, which still contribute 15% to the country’s GDP. The trade war between Beijing and Washington has led to retaliatory tariffs and market disruptions, threatening both economies. Efforts to de-escalate the situation are underway, with upcoming high-level discussions between Chinese and US officials.

To bolster its economy, China is also focusing on stimulating consumer spending, particularly in the real estate sector. Measures include reducing the cost of borrowing for home purchases to stabilize the property market. Despite these efforts, challenges persist, with declining property sales and investment in recent months.

Overall, while the monetary stimulus is expected to have a positive albeit limited impact, experts suggest that the main issue affecting credit is demand rather than supply. As China navigates the complexities of the trade war and economic challenges, the effectiveness of these measures remains to be seen.