The US President, Mr. Donald Trump’s call for the Federal Reserve to mirror its Chinese counterpart misses the mark because Beijing’s main defense against trade war fallout will come from the finance ministry, and not the central bank.
If tariffs begin to really hurt China’s growth, there’s plenty of direct fiscal firepower left to stoke the economy, before China's People's Bank would have to cut interest rates. Data released now shows an across-the-board slowdown in April.
Chinese central and local authorities have at least 25.1 trillion yuan (3.65 trillion dollars) unspent in their budgets this year, according to data. That’s two trillion yuan more than the ammunition China had in the same period last year, the equivalent to the entire German annual output.
'Chinese leaders will be able to better utilize different kinds of policy tools than their US counterparts if the trade war persists, and that’s where China’s confidence comes from,' said an economist at Mizuho Securities Asia Ltd in Hong Kong. 'From monetary policy and fiscal policy to the dominant role of the state-owned enterprises, China’s control on the economy is obviously stronger.'