Leading investment bank Goldman Sachs has projected a slower growth for China at 4% in 2025 and 3.5% in 2026, as against the previous projections of 4.5% and 4% respectively, citing negative effects of Trump's tariffs on the economy.
Goldman Sachs believes the easing measures that China may resort to are unlikely to fully offset the hit due to tariffs. "We anticipate the Chinese government will further intensify policy easing, projecting 60bp of policy rate cuts (vs. 40bp previously)," the report said. Goldman Sachs added that the "even these significant easing measures are unlikely to fully offset the negative effects of the tariffs."
China's SSE Composite Index ended higher by close to a percent on April 10, a day after Trump's tariff levy, on hopes that Xi Jinping's plan for a stimulus could help revive demand and support domestic businesses. China's top leaders are poised to discuss additional economic measures sometime this week.
Analysts are of the view that the People’s Bank of China might announce steps on monetary easing, in an effort to support the economy. Already, Beijing has relaxed its control over offshore yuan, sending it to a historic low, in an effort to support the China’s export competitiveness.
A steep weakness in yuan may prompt a flight of capital, and fuel weak sentiment in the economy, and derail progress toward trade negotiations.
Read More: China warns it won’t back down as Trump slaps 125% tariffs amid trade war escalation
China's State Council Information Office had released a white paper on trade relations with USA April 9, which warned that the 'reciprocal tariffs' will damage America's 'own and others' interests' and will ultimately backfire. "Instead, it will do severe damage to world trade and investment, which could trigger a global economic and financial crisis, with the inevitable consequences for oneself and others," the white paper added.
Released before Trump's imposition to addition tariffs on China, the white paper called for China and the United States to 'resolve differences in economic and trade areas through equal-footed dialogue and mutually beneficial cooperation'.
Trump, by targetting China, while extending tariff relief to other countries, is expecting to seek the support of other trading partners in its rivalry with Beijing.
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