ECONOMY

Update: China Unveils Monetary Support to Stem U.S. Tariff Impact

Published: May. 7, 2025 11:30 a.m. GMT+8

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China’s central bank unveiled a raft of monetary easing measures on Wednesday, intensifying efforts to boost domestic demand and support the stock and property markets amid increasing concerns that the tariff war with the U.S. is starting to weigh on economic growth.

The announcement by the People’s Bank of China (PBOC) at a press briefing with two other financial regulators came shortly after confirmation by both the U.S. and China that their officials will hold talks in Switzerland later this week to try and resolve their trade dispute.

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China’s central bank is implementing broad monetary easing, including a 0.5 percentage point RRR cut, injecting 1 trillion yuan ($138 billion) of liquidity, and a 10-basis-point policy rate cut.
Additional measures include a 25-basis-point reduction in subsidized mortgage rates to support the housing market amid U.S.-China trade tensions and sluggish consumption.
Despite Q1 GDP growth of 5.4% year-on-year, analysts expect momentum to weaken; boosting domestic demand is now a top priority.

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Who’s Who

Trump Administration: The article states that the Trump administration introduced “reciprocal tariffs,” escalating trade tensions with China and increasing U.S. tariffs on Chinese goods to 145%. Although the administration is now seeking to negotiate deals with countries affected by these tariffs, including China, formal talks between Beijing and Washington have not yet begun, although both sides have expressed willingness for dialogue.

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What Happened When

Q1 2025：: China recorded a better-than-expected year-on-year GDP growth of 5.4%, largely due to an export rush ahead of higher U.S. tariffs.

April 2025：: Tit-for-tat trade measures led to additional U.S. tariffs on Chinese goods reaching 145%.

April 2, 2025：: President Donald Trump announced 'reciprocal tariffs', escalating trade tensions between the U.S. and China.

May 7, 2025：: People’s Bank of China Governor Pan Gongsheng announced a broad monetary easing package, including lowering the reserve requirement ratio by 0.5 percentage points, injecting about 1 trillion yuan of liquidity, cutting the seven-day reverse repo rate by 10 basis points, and reducing the individual housing provident fund loan rate by 25 basis points.

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