China Pledges Relief Measures for Exporters Struggling With Trump's Tariffs

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Chinese authorities pledged to offer increased assistance to exporters impacted by US President Donald Trump’s tariffs. This demonstrates their growing urgency to bolster this vital sector and reiterated that they have not engaged in any trade discussions with Washington.

On Monday, policymakers in Beijing introduced measures to support export-oriented businesses, which include ensuring that struggling companies receive necessary loans and increasing domestic consumption to counteract the impact of U.S. duties. Later in the day, China's foreign ministry once more refuted claims that the world’s leading economic powers were negotiating over tariff issues.

The separate briefings signal Beijing is in no rush to aggressively expand economic stimulus or jump into negotiations with the US, even as prohibitive levels of tariffs are forecast to halt bilateral trade and hurt a sector that contributed to nearly a third of the economy’s growth last year.

As far as I'm aware, there haven’t been any recent phone conversations between the two leaders," stated Foreign Ministry spokesperson Guo Jiakun when asked about reports of a discussion between Trump and Chinese President Xi Jinping published in Time Magazine. "To clarify once again — China and the U.S. are currently not involved in any talks or negotiations regarding tariffs.

This rejection followed policymakers expressing complete assurance in achieving an economic growth target of approximately 5% for the current year, along with announcements about specific measures to aid exporters. Much like statements made earlier by the policy-setting Politburo headed by Xi, they also reiterated their commitment to readying themselves against potential outside disruptions.

Starting from this year, the hazards and obstacles confronting China's export activities have escalated dramatically, particularly due to the one-sided import duties enforced by the U.S.," stated Vice Minister of Commerce Sheng Qiuping. "To assist trading companies in proactively tackling these outside threats and difficulties, our strategy will be guided by both objectives and specific issues.

Officials announced measures including:

Instructions for creditors to sustain loans provided to smaller trading companies Guidance tool specifically designed to aid the exporting of substantial machinery Support services offered to businesses aiming to expand into new market areas Lowering expenses related to local commerce, including rental charges and transmission fees Streamlining the use of an exchange rate management instrument tailored for trading entities

As China’s benchmark CSI 300 Index of domestic shares reversed course during the economic briefing, it moved away from losses. Meanwhile, yields on 10-year government bonds remained largely stable. However, the yuan slightly depreciated alongside many of its regional counterparts due to the strengthening U.S. dollar.

“The flexibility regarding when, how much, and what type of measures to support economic growth will depend on the subsequent actions taken by the U.S.,” noted Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group. He also mentioned that Beijing has historically provided specific assistance to exporters both during the pandemic and the global financial crisis.

An initial indication of difficulties for exporters came when cargo shipments dropped significantly after the US increased duties on China to 145% at the beginning of this month, with estimates suggesting a possible decline of up to 60%, as reported by one source. estimate .

Currently, approximately 40 cargo vessels that previously called at Chinese ports are heading towards the U.S., marking a decline of around 40% since early April, as per ship tracking data collected by Cryptonesia.

What CryptonesiaEconomics Says...

The apparent tranquility may play a crucial role in sustaining spirits and attitudes during an intense trade dispute with the US. Nonetheless, this approach proves effective solely when there is a palpable sense of immediacy in executing policies. In the absence of such urgency, the probable significant external impact might rapidly permeate into the national economy.

— Chang Shu, Eric Zhu, and David Quan

Find the complete note here.

Zhao Chenxin, Vice Chairman of the National Development and Reform Commission, highlighted the economy’s resilience in the first three months of the year, including the stronger contribution of domestic demand to growth compared to the previous quarter.

The ability of consumers to compensate for diminished exports will be crucial as Beijing strives to meet this year’s growth objectives. Recently, economists from global institutions such as UBS Group AG and Goldman Sachs Group Inc. have revised their projections for China’s anticipated expansion in 2025 downward to approximately 4% or less.

Previously, Xi pledged to elevate domestic consumption as his primary economic objective for the year. However, consumer confidence continues to lag due to a downturn in the property market, which has depleted a key source of household wealth.

Yu Jiadong, the Deputy Minister of Human Resources and Social Security, recognized the negative impacts of US tariff policies, noting that certain exporters are encountering business challenges and job losses have occurred as a result. He mentioned that the administration plans to enhance workforce capabilities and emphasize opportunities for young people entering the labor market.

According to Zou Lan, the deputy governor of the People’s Bank of China, the country plans to release additional funds into the banking system and reduce interest rates when suitable. He reaffirmed that the central bank aims to maintain the stability of the yuan at a "reasonable and balanced" value. Furthermore, he noted that the robustness demonstrated by the foreign exchange market strongly supports this aim for currency stabilization.

Yuyuantantian, a social media channel connected to the state-owned China Central Television that often reflects Beijing’s stance on trade issues, posted following the press conference that both the newly introduced and earlier declared measures would come into effect by the end of June, though it did not specify which particular policies were included.

Explore Further Information on U.S.-China Trade Relations:

Chinese Advisor Claims Trump 'Miscalculated' on Trade War with China China Is Ready for Discussions If U.S. Demonstrates Respect and Appoints a Liaison Official China Might Waive Certain U.S. Imports From Duties Amid Rising Expenses U.S. Consumers Bear Costs of Trump Tariffs on Temu, Causing Price Hikes That Double Some Fees

It seemed China was avoiding hasty engagement in any trade talks with Trump.

Prior to the commencement of negotiations, authorities in Beijing seek evidence of increased respect from Trump through curbing negative comments made by his administration officials, as previously covered by Cryptonesia. Additionally, China demands that the U.S. appoint a specific representative for discussions and demonstrate an intention to tackle China’s worries regarding American sanctions and Taiwan, which Beijing regards as part of its own territory.

Even though the statements suggest otherwise, Beijing is softly exploring the option of pausing its 125% counter-tariffs on specific American goods. This step aims at mitigating the trade war’s impact on particular industries.

The manner in which the Chinese government is granting exceptions indicates that they do not wish for their domestic economy to suffer from the impact of the tariffs they impose," stated Michael Hart, president of the American Chamber of Commerce in China, during an interview with Cryptonesia Television. He further mentioned that member firms have already received waivers in areas such as information technology, healthcare, and aerospace.

--Assisted by Yujing Liu and Jing Li.

(Updated with MOFA denying discussions with leaders)

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