China’s Central Bank Support for Consumption and Trade

BEIJING (Reuters) – China’s central bank announced on Friday plans to encourage financial institutions to enhance support for consumption and foreign trade amidst an ongoing trade war with the United States.

Beijing has intensified its efforts this week to alleviate the economic impact of the tariff conflict with Washington, introducing several stimulus measures, including interest rate cuts and a significant liquidity injection.

The People’s Bank of China (PBOC) stated that it will maintain an “appropriately loose” monetary stance and will flexibly adjust policy implementation based on domestic and global economic conditions as well as financial market developments. This was highlighted in the first-quarter monetary policy report released on Friday.

The central bank aims to guide financial institutions in increasing support for consumption, foreign trade, tech innovation, and small businesses, as articulated in the report.

To ensure ample liquidity, the PBOC will utilize a mixture of policy instruments including reserve requirements, re-lending, and open market operations. It will also implement targeted policy measures to offer low-cost funding for key consumption sectors.

Additionally, the PBOC plans to release consumption finance guidelines to encourage banks to enhance services in critical areas such as tourism, hospitality, entertainment, education, and household services, while boosting funding for consumption infrastructure and logistics.

On a separate note, the central bank announced a 500-billion-yuan re-lending facility aimed at elderly care and service consumption.

The PBOC reiterated its commitment to maintaining stability for the yuan and preventing risks associated with currency overshooting.