China has new "language" on monetary policy, strong confidence to overcome Trump's tariffs

China will adopt a "reasonably loose" monetary policy for the first time in 14 years, combined with proactive fiscal policy to boost economic growth next year.

China's economy has been struggling, forcing policymakers to take action in September 2024. (Source: Bloomberg)

In addition, China will focus on boosting domestic demand and consumption.

The new monetary policy language marks the first time Beijing has loosened policy since late 2010.

Following the news, the stock market surged, with the Hang Seng index of Hong Kong (China) rising 2.8% to a one-month high.

The announcement signals a strong fiscal stimulus plan, a big rate cut and asset purchases by 2025, said Xing Zhaopeng, senior China strategist at ANZ Bank.

The policy reflects the world 's second-largest economy's strong confidence in the face of warnings about possible tariffs from President-elect Donald Trump.

The country's economy has faced many difficulties this year, forcing policymakers to take intervention measures in September 2024.

At that time, the People's Bank of China (PBoC, the central bank) announced the most aggressive monetary easing policy since the Covid-19 pandemic, cutting interest rates and pumping 1,000 billion yuan ($140 billion) into the financial system, among other measures.

The world's second-largest economy may hit its growth target of around 5% this year, but maintaining that pace in 2025 - when President-elect Donald Trump returns to the White House and threatens to impose tariffs of 60% or more on Chinese imports - will be a tough task.

China has shown a heavy reliance on manufacturing and exports this year, while domestic consumer demand has disappointed amid a property market downturn that has dented consumer wealth and most government stimulus has been directed at manufacturers and infrastructure.

Advisers recommended the government keep its growth target unchanged next year, but also called for stronger fiscal stimulus to mitigate the impact of looming US tariffs and deflationary pressures.

Source: https://baoquocte.vn/trung-quoc-co-ngon-tu-moi-ve-chinh-sach-tien-te-tu-tin-manh-me-vuot-thue-quan-cua-ong-trump-296791.html