China commits to increasing targeted assistance for businesses amid the impact of the U.S. trade war.
Chinese President Xi Jinping attends the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China, March 5, 2025. Florence Lo | Reuters
BEIJING — China plans to assist struggling businesses with targeted measures in response to “increased external shocks,” according to a readout of a meeting chaired Friday by President Xi Jinping. The gathering of the Politburo, the second most powerful political body in China, occurs amid escalating tensions between Washington and Beijing, which have led to new enforcement of tariffs exceeding 100%. Major Wall Street banks have revised their GDP forecasts for China downward this year, while the country still aims to meet its ambitious growth target of “around 5%” set in March.
Authorities called for “multiple measures to help businesses in difficulty,” including financial support, as noted in the Chinese-language readout, which was translated for broader understanding. The Politburo also advocated for a “timely reduction” of interest rates and the reserve requirement ratio—the mandatory cash reserve banks must hold.
Policymakers are maintaining their stance from earlier in the year while expressing readiness for targeted measures, according to Zong Liang, chief researcher at Bank of China. To mitigate the impact of tariffs, he anticipates that China will conduct more research on specific businesses and consider targeted support.
In a notable move, China raised its deficit target to 4% of GDP in March. Finance Minister Lan Fo’an suggested at that time that there is additional flexibility in fiscal policy. Following the recent escalation of U.S. trade tensions, local Chinese governments and major enterprises have initiated efforts to assist exporters in redirecting their products to the domestic market.
The readout from the Politburo meeting stressed the necessity to increase income for middle- and lower-income groups and enhance consumption of services. Leaders also called for further technological advancements, including the integration of artificial intelligence.
“The press release indicates the government’s readiness to implement new policies in response to external shocks affecting the economy,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “It appears that Beijing is not rushing into a large stimulus at this time,” he added. “Careful monitoring and assessment of the timing and magnitude of the trade shock are important.”
**Policy Coordination**
The CSI 300 briefly dipped, and Hong Kong’s Hang Seng Index moderated gains following the release of the meeting statement. The Politburo, made up of high-level figures from the ruling Chinese Communist Party, typically outlines broad policy directives.
The latest meeting reaffirmed policies from the State Council—the highest executive body—and government ministries, “demonstrating a strong commitment to high-level collaboration,” remarked Bruce Pang, adjunct associate professor at CUHK Business School. “While these measures may not present many unexpected or groundbreaking innovations, they empower policymakers with the tools needed to navigate uncertainties from external factors,” he noted, adding that he anticipates an upcoming private sector law to improve the business environment further.
The standing committee of China’s parliament, the National People’s Congress, is scheduled to convene from Sunday to Wednesday to review a new law aimed at supporting the private sector.
