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China’s central bank said Wednesday that it would cut interest rates in an effort to bolster its economy amidst the country’s ongoing trade war with the United States.
The People’s Bank of China announced a series of 10 steps intended to try to get people spending, including cutting short-term interest rates and the amount of funds banks have to hold in reserve. The bank also removed restrictions on auto financing firms and made more funds available for banks to lend for government initiatives like scientific and technological innovation, according to the New York Times.
It’s the biggest economic move yet for Chinese officials since President Donald Trump announced 145% tariffs on all goods imported from China. The government referred to the package as a “policy package to stabilize the market,” according to the Wall Street Journal.
It will include lowering the rate on seven-day reverse repurchase agreements, a key policy rate in China, by 0.1 percentage point, as well as a cut of the same size in the benchmark loan prime rate. The bank also announced a quarter-point rate cut for a home buying program that offers lower mortgage rates than commercial loans.
The unveiling of the economic package came shortly after the U.S. and China announced that top officials from both countries will meet this week during a trip to Geneva, the first formal meeting about trade between the two countries since Trump announced the tariffs on China last month. China retaliated against those levies with 125% tariffs of its own on American goods.
When it released economic data last week, China reported a sharp slowdown in manufacturing activity in April, thanks in large part to a sharp drop in new orders of goods for export.
Trump has announced exemptions on some Chinese goods, including smartphones and semiconductor chips, but the vast majority of products remain subject to the tariffs. Last week, the White House ended the de minimis exemption on goods valued at less than $800.