BEIJING — China is weighing new policy tools in the face of an international economic and trade order that is “under severe impact”, Chinese Premier Li Qiang told a symposium with Chinese firms in Jakarta over the weekend.
“The fragmentation of industrial and supply chains has deepened, and trade barriers have increased, which has had a great impact on the economic development of all countries,” state news agency Xinhua reported on Sunday, citing Li.
China is studying new policy tools, including some “unconventional measures”, which will be launched as the situation changes, the Chinese premier said.
Li also said China will continue strengthening economic cooperation with more countries to support the overseas business development of Chinese enterprises.
Huawei, SAIC Motor and New Hope Group were among the Chinese companies at the symposium.
Li is on a three-day visit to Indonesia until Monday and will then travel to Malaysia for the Asean-GCC-China Summit.
China cut benchmark lending rates for the first time since October on Tuesday last week, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war.
The widely expected rate cuts are aimed at stimulating consumption and loan growth as the world’s No. 2 economy softens, while still protecting commercial lenders’ shrinking profit margins.
Still, the size of the rate reductions was mild and reflected the incremental pace of monetary easing in recent years and what analysts interpreted as some wariness among policymakers for more aggressive steps while they navigate the trade war with the United States.
The People’s Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0 percent , while the five-year LPR was reduced by the same margin to 3.5 percent.
Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. Both rates are now at the lowest level since China ravamped the LPR mechanism in 2019.
The rate cuts are part of a package of measures announced by PBOC Governor Pan Gongsheng and other financial regulators before talks between China and the U.S. in Geneva earlier this month that led to a de-escalation in their trade war.
Global investment banks are raising their forecasts for China’s economic growth this year, after Beijing and Washington agreed to a 90-day pause on tariffs, despite uncertainty around Sino-U.S. trade negotiations.
Recent economic readings show growth remains patchy and lacklustre. China’s new home prices were unchanged in April from a month earlier, official data showed on Monday, extending the no-growth trend to nearly two years despite policymakers’ efforts to stabilise the sector. Meanwhile, new bank loans also tumbled more than expected last month.
