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Chinese officials vowed to provide more support for exporters affected by US President Donald Trump’s tariffs, showing greater urgency to shore up the crucial sector while denying having had any trade talks with Washington.
Policymakers in Beijing on Monday laid out policies to aid exporting companies, including plans to ensure troubled firms get the loans they need and boost domestic consumption to absorb the blow of US levies. Hours later, the Chinese Foreign Ministry again denied the world’s two largest economies were discussing tariffs.
The separate briefings signal Beijing is in no rush to aggressively expand economic stimulus or jump into negotiations with the US, even as prohibitive levels of tariffs are forecast to halt bilateral trade and hurt a sector that contributed to nearly a third of the economy’s growth last year.
“As far as I know there have not been any calls between the two presidents recently,” Foreign Ministry spokesman Guo Jiakun said in response to a question about Trump telling Time Magazine he had had a conversation with Chinese President Xi Jinping. “Let me make it clear one more time – China and the US are not engaged in any consultation or negotiation on tariffs.”
The denial came after policymakers professed full confidence in reaching the economy’s expansion target of around 5% this year while announcing targeted steps to support exporters. They largely repeated vows last week by the decision-making Politburo, led by Xi, to prepare for external shocks.
“Since the beginning of this year, the risks and challenges faced by China’s foreign trade development have increased significantly, especially the unilateral tariffs imposed by the US,” said Sheng Qiuping, vice minister of commerce. “In order to help foreign trade enterprises actively respond to external risks and challenges, we will adhere to a goal-oriented and problem-oriented approach.”
Officials announced measures including:
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Guidance for lenders to maintain loans to small and medium-sized trade firms
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Special credit tool to support the export of large equipment
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Assistance to firms to diversify markets
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Reducing costs for domestic trade, such as rent and streaming fees
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Optimizing the exchange rate hedging tool for trade firms
China’s benchmark CSI 300 Index of onshore stocks erased losses as the economic briefing went on. The yield on 10-year government bonds was little changed, while the yuan weakened a tad along with most regional peers as the dollar gained.
“Both the timing, the size and approach of growth supportive measure will be flexible, pending the next move of the US,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group, adding that Beijing has a track record of offering exporters-specific support during the pandemic and the global financial crisis.
In an early sign of trouble for exporters, cargo shipments have plummeted since the US raised levies on China to 145% early this month, perhaps by as much as 60%, according to one estimate.
There are currently about 40 cargo ships that recently stopped at ports in China and are now bound for the US, down by about 40% from early April, according to ship tracking compiled by Bloomberg.
What Bloomberg Economics Says...
“The overt calmness can be important in maintaining morale and sentiment amid a bitter trade war with the US. This strategy works, however, only if there is a sense of urgency on the ground in policy implementation. Without it, the likely sharp external shock could quickly spread to the domestic economy.”
— Chang Shu, Eric Zhu and David Qu
Read the full note here.
Zhao Chenxin, Vice Chairman of the National Development and Reform Commission, highlighted the economy’s resilience in the first three months of the year, including the stronger contribution of domestic demand to growth compared to the previous quarter.
Whether consumers can make up for lost exports will be key to Beijing’s attempt to achieve this year’s growth target. Economists at international banks including UBS Group AG and Goldman Sachs Group Inc. have lowered their forecasts for China’s 2025 growth in recent weeks to around 4% or lower.
Xi previously vowed to make boosting domestic consumption a top economic priority this year, although consumer confidence remains sluggish as a property market slump zapped a main source of wealth for households.
Yu Jiadong, Vice Minister of Human Resources and Social Security, acknowledged the adverse effects of US tariffs, saying some exporters face business difficulties and some jobs are affected. He said the government will take steps to improve workers’ skills and prioritize youth employment.
China will also free up more cash for banks and cut interest rates at an appropriate time, according to Zou Lan, deputy governor of the People’s Bank of China. He reiterated the Chinese central bank would keep the yuan stable at a “reasonable and equilibrium” level, adding that the foreign exchange market’s resilience provides strong support for a stable yuan.
Yuyuantantian, a social media account affiliated with state-run China Central Television that regularly signals Beijing’s thinking about trade, said in a post after the briefing that the new and previously announced measures will be implemented by the end of June, without specifying the policies.
China appeared to have resisted rushing into any trade negotiations with Trump.
Before talks begin, officials in Beijing want to see Trump show more respect by reining in disparaging remarks by members of his cabinet, Bloomberg previously reported. China also wants the US to name a point person for talks and show a willingness to address China’s concerns around American sanctions and Taiwan, the self-ruled island Beijing considers its territory.
Despite the rhetoric, Beijing is quietly considering suspending its 125% retaliatory tariffs on some US imports, a move that will contain the fallout of the trade war on certain sectors.
“The way the Chinese government is making exemptions, clearly they don’t want their own economy to be harmed by the tariffs that they lay on,” Michael Hart, president of the American Chamber of Commerce in China told Bloomberg Television, adding that member companies have already seen exemptions in IT, health care and aviation sectors.
--With assistance from Yujing Liu and Jing Li.
(Updates with MOFA denial of leaders’ talks)
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