China’s government is taking steps to address its economic challenges, describing the situation as “very severe and complex.” Commerce Minister Wang Wentao stated that the country is prepared to implement measures to prevent an economic slump in the second half of the year, utilizing a “plentiful” toolbox of economic stimulus. The move comes as China’s economic growth faces headwinds, including sluggish domestic consumption and the impact of global trade turmoil, particularly due to tariffs imposed by the US.
China’s central bank and five other government divisions have unveiled 19 measures to enhance consumer purchasing power and expand financial support for key sectors. These measures aim to boost domestic demand, stabilize markets, and increase support for families. Some initiatives include wage adjustments, childcare subsidies, and financial assistance. The government has outlined plans to increase household spending on consumer goods and furniture, boost manufacturing in the light industry sector, and promote sales of green and smart home goods in rural areas.
The stimulus package includes significant measures such as reducing the average interest rates for existing mortgages by 0.5%, implementing a 15% minimum down payment for residential homes, and launching a $71 billion swap program to allow access to funding for funds, insurers, and brokers to buy stocks. Additionally, $42 billion in low-interest rate loans will be provided to commercial banks for share buybacks or acquisitions.
China’s stimulus efforts have injected substantial liquidity into the economy, including a $1.8 trillion new CNY loan issuance in the first half of 2025 to businesses, public institutions, and households. The government is also planning to issue $68 billion in special sovereign bonds to capitalize state-owned banks and injecting at least $55 billion into China banks, including major institutions like ICBC, Agricultural Bank of China, and Bank of China.
