China implements monetary stimulus to offset impact of U.S. trade war, positive for the market.

From Yahoo Finance: 2025-05-06 21:42:00

Chinese authorities announced stimulus measures, including interest rate cuts and liquidity injections, to soften the economic damage from the U.S. trade war. Talks between U.S. and Chinese officials are set for this weekend in Switzerland. Chinese stocks rose on news of easing steps and upcoming trade discussions.

China’s central bank will lower its benchmark interest rate by 10 basis points to 1.40% effective May 8. The reserve requirement ratio for banks will also be reduced by 50 bps, releasing 1 trillion yuan in liquidity. Additional measures include support for A-share listed companies, expanded investment opportunities, and lower mortgage costs.

Analysts suggest the timing of monetary policy easing was influenced by recent yuan strength. While the impact of stimulus measures is expected to be positive but modest, they could boost market confidence. Talks this weekend may include discussions on tariff reductions and eliminating duties on specific products.

Beijing’s fiery rhetoric against U.S. tariffs continues as tensions rise. Stimulus measures are seen as preemptive, anticipating prolonged trade negotiations. The Chinese economy is already feeling the effects of tariffs, with concerns over job market impact and deflationary pressures.

Read more: China injects ‘tactical’ monetary stimulus ahead of US trade meeting