AFR -- just posted China ready to Pump...

AFR -- just posted China ready to Pump prime
https://www.copyright link/world/asia/the-sky-won-t-fall-china-tries-to-calm-tariff-storm-20250407-p5lpnt

In a lengthy commentary, Beijing said it has room to ease borrowingcosts and could introduce a range of other options to defend its economyagainst Trump’s sweeping tariffs on all imports into the United States.

China has hit back at Trump’s tariffs quickly. Michael Howard

President Xi Jinping’sgovernment had quickly retaliated late on Friday, announcing it would impose a 34 per cent blanket levy on imports from the US starting on April 10, matching the level of Trump’s so-called reciprocal tariffs on Chinese products. Authorities in Beijing announced several other countermeasures, including immediately restricting exports of seven types of rare earths.

The editorial in the state-sponsored People’s Daily newspaperlate on Sunday said there is slim chance for negotiations between the world’slargest economies, but argued that China has the tools to cushion any tradeblow.

“We haven’t closed the door to negotiations, but we don’t harbourwishful thinking either, having made various preparations to respond toimpacts,” the article said.

“The abuse of tariffs by the United States will have an impact on China,but the sky will not fall. The US government’s imposition of a 34 per centtariff on China, added to previously imposed tariffs, will severely restrictbilateral trade and inevitably cause short-term negative effects on ourexports, increasing economic downward pressure.

“However, China is a super-large economy. Facing the impact of US tariffbullying, we have strong resistance from such pressure. In recent years, wehave actively built a diversified market, and our dependence on the US markethas been declining.”

The commentary did little to head off a bloodbath across financialmarkets in Asia on Monday, with Japan’s benchmark Nikkei 225 index diving nearly 8 per cent shortly after the market opened. Australia’s S&P/ASX 200 tumbled more than 6 per cent and South Korea’s Kospi lost 4.4 per cent.

Hong Kong and Chinese stocks also crumbed in the face of a wideningglobal trade war and fears it will unleash a deep recession. Hong Kong’s HangSeng Index was down 8 per cent in early trade. Shares in online giants Alibabaand Tencent were down more than 8 per cent.

Macquarie analysts have suggested the new tariffs could shave 15percentage points off China’s exports and between 2 and 2.5 percentage pointsoff its projected GDP growth rate of 5 per cent.

In a bid to bolster resolve within China, theeditorial flagged it had further monetary and fiscal policy tools it could useto soften the impact of a global trade war, such as deeper cuts to the reserverequirement ratio for banks as well as interest rate reductions.

“[These] have ample adjustment room and can be introduced at any time.”

The editorial also noted there was more roomfor fiscal expansion designed to jump start flagging domestic consumption athome and offset slowing US demand for Chinese exports.

“We will boost domestic consumption with extraordinary strength,” readthe article, adding that China will increase spending intensity as well asexpand fiscal deficits, special bonds and national bonds.

China had been bracing for Trump’s tariffs, which during thepresidential campaign he flagged could reach as high as 60 per cent.

In March, Beijing introduced 30 measuresspecifically designed to stimulate consumption, targeting the country’s vast 157 trillion yuan ($34 trillion) in household savings.

Despite Trump’s tariffs hitting economies from Vietnam to Cambodia,China has maintained its position that America’s dramatic trade upheaval isdesigned to “contain and suppress” China’s economic growth.

“The commentary is an important read as an internal message to projectresolve and confidence in the face of American ‘containment and suppression’,”Bill Bishop, longtime China analyst and publisher of the Sinocism newsletter,said.

“It hints at policy responses to soften the impact on the Chineseeconomy, and previews the domestic and external propaganda messaging aroundthese new tariffs.”

The People’s Daily outlet and other state media areoften used by the Communist Party to try and bolster internal resolve andpublicise the party’s top-level thinking.

Really DYOR