China announces sweeping measures to ease policy in bid to shore up trade-war hit economy

On March 6, 2025, in Beijing, China, Pan Gongsheng, the governor of the People’s Bank of China, participated in a news conference during the third session of the 14th National People’s Congress. China’s central bank and financial regulators disclosed extensive policy measures on Wednesday to enhance economic growth amidst escalating trade concerns. These measures include interest rate cuts and adjustments to reserve requirements.

According to Governor Pan Gongsheng, China will reduce the seven-day reverse repurchase rates by 10 basis points to 1.4%, resulting in a decrease in the loan prime rate. Additionally, the reserve requirement ratio will be lowered by 50 basis points, injecting 1 trillion yuan ($138.5 billion) into the market.

The policy changes will be implemented shortly, with the interest rate adjustments effective on Thursday and the reserve requirement ratio changes set for May 15. The officials also outlined plans to support various sectors such as technology and real estate, along with introducing a 500-billion-yuan lending facility for consumption and elderly care.

Moreover, adjustments will be made to mortgage rates under the housing provident fund, benefiting first-time homebuyers with reduced rates. The government aims to support small and medium enterprises as well as the private sector, with further measures expected to be announced soon.

Analysts noted that the recent stimulus measures indicate a more urgent approach to strengthen the economy, with the depreciation pressure on the Chinese yuan easing. The upcoming trade talks between Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent may signify a potential breakthrough in the ongoing trade war between the two nations.