China underestimated the impact of Trump tariffs on economic recovery
Chinese policy makers on Monday trying to ease the fears of broad US tariffs can thwart efforts to support fragile economic recovery, even when analysts warn large -scale levies increase the risk of decreased sharp growth.
The global trade war of US President Donald Trump has shaken the financial markets and increases the concern of recession, especially as a Tit-For-Tat tariff between the two largest economies in the world threatening to overthrow supply chains and various industries.
However, Zhao Chenxin, Deputy Head of the National Development and Reform Commission (NDRC), Chinese State Planner, said he was “fully confident” the country would achieve its economic growth target of around 5% for 2025.
Zhao refrained from announcing new support or stimulus steps, but said the NDRC would launch a new policy during the second quarter in line with the economic conditions that were in force at the time.
“The first quarter achievement has laid a strong foundation for economic development throughout the year,” Zhao said. “No matter how the international situation changes, we will anchor our development goals, maintain strategic focus and concentrate on doing our own things.”
This guarantee is in contrast to the general consensus among Chinese observers that the spinning trade war with the United States will have a significant impact on the second largest economic growth in the world.
International monetary funds, Goldman Sachs and UBS were all recently revised their estimated economic growth for China for 2025 and until 2026, citing the impact of Trump’s tariffs – no one hoped that the economy would achieve the official growth target of Beijing.
Washington has slapped 145% of Chinese goods tariffs as part of Trump’s “Liberation Day” Salvo on April 2, encouraging Beijing to reply with 125% levies on US imports, effectively imposing trade embargo on their respective goods.
Chinese President Xi Jinping has a tour to Southeast Asia and other officials have intensified diplomatic outrections to unite countries on Trump’s tariff attacks. Beijing also threatened to retaliate against the capital who was in favor of Washington.
The trade war came at a very difficult time for the Chinese economy, which was tempting with deflation due to slow income growth and prolonged property crisis.
Analysts hope that Beijing gives more monetary and fiscal stimulus over the next few months to support growth.
Speaking with Zhao, Deputy Governor of the Chinese Rakyat Bank, Zou Lan, said that PBOC will conduct further cuts for interest rates and the amount that must be owned by commercial banks as reserves, while re -emphasizing the commitment to keep Yuan stable.
The last PBOC cut its main policy level in September, reducing the reverse repo level by 7 days by 20 basis points.
Source: Reuters
