Chinese regulators should step up support for the economy and keep ample liquidi...
SHANGHAI - Chinese regulators should step up support for the economy and keep ample liquidity in the financial system, Vice Premier Liu He said on Thursday, suggesting Beijing would soon unveil more policies to bolster growth amid rising U.S. trade pressure.
Despite a slew of support measures and policy easing since last year, China’s cooling economy is still struggling to get back on firm footing, and last month’s sudden escalation in U.S.-Sino tensions has raised fears of a full-blown trade war that could trigger a global recession. Earlier on Thursday, China Daily, citing economists, said China is expected to adjust money and credit supply in coming weeks, including cuts to interest rates or reserve ratio requirements, to counter “downside risks” if trade tensions escalate.
Sources told Reuters in February that the PBOC considered a benchmark rate cut a last resort. But some analysts now think one or more cuts are likely if the trade dispute spirals out of control and the U.S. Federal Reserve starts cutting its rates, giving the PBOC more room to maneuver. “China is capable and confident of maintaining stable operation of the foreign exchange market and keep the yuan basically stable at reasonable and balanced levels,” Pan Gongsheng, head of the State Administration of Foreign Exchange, said at the forum.
Analysts at Bank of America Merrill Lynch believe China’s GDP growth could fall to 5.8% this year and 5.6% in 2020 if the trade war intensifies, and expects Beijing to respond with four benchmark rate cuts, more RRR cuts, consumption subsidies and measures to stabilize employment.
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