China digs in as it is ready to help businesses hit by US trade war

China has prepared a slew of supportive measures, to help businesses who will be affected by the tariffs imposed by the Trump administration.

Supporting measures will include a host of local assistance initiatives such as export assistance and skills training, to help those businesses affected by the ongoing trade war with the US, Finance Minister Liu Kun has said.

The Finance Minister Liu’s comments were published by the official Xinhua news agency on Sunday evening, a few hours after the central bank announced a move to inject US$110 billion into the world’s second-biggest economy to stimulate growth.

The coordinated growth efforts by China’s fiscal and monetary authorities suggest Beijing is increasingly concerned about the impact of the trafiffs on economic growth, a victim of its trade dispute with the US.

US President Donald Trump has now imposed tariffs on nearly half of all imports from China, and China has retaliated with its own tit-for-tat measures.

Liu said that “some regions and some companies” had already been hit by the trade war but “China has the capabilities to minimise the impact”.

The minister also said China would adopt a “more proactive” fiscal policy to counteract the downward pressure on economic growth, including cutting taxes and fees on a larger scale and speeding up bond issuance to safeguard economic growth, according to Xinhua.

Total tax cuts for 2018 are expected to exceed 1.3 trillion yuan (US$189 billion), Liu said.

While China’s headline growth remained on track – its GDP increased by 6.7 per cent in the second quarter – there are growing signs of deceleration in China’s US$12 trillion economy as it grapples with a mountain of debt and weak investor confidence.

China’s central bank will increasingly lean towards monetary easing to complement expansionary fiscal policy.

Although Liu promised tax cuts, Xinhua also reported that he had said China’s overall tax burden was not high, defying complaints from Chinese businesses and some academics that the state was taking too much.

China has hit back after US tariffs on Chinese goods came into effect and President Donald Trump threatened to impose more.

China’s commerce ministry said it had lodged a new complaint with the World Trade Organization (WTO).

Meanwhile, Russia has announced extra duties on US imports in retaliation for earlier US steel tariffs.

Beijing has accused the US of starting the “largest trade war in economic history”.

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