China’s latest stimulus measures fail to impress as investors focus on U.S. trade talks

China’s last impulse to revive growth with broader stimulus measures has not been able to encourage its stock market, since concerns about economic deterioration exceed the optimism of policies, with investors focused on commercial conversations with the United States.

The scope of the stimulus package, including interest rate cuts and large liquuidity injection, caused some comparisons with a hunger policy deployment last September that had fed a market rally, lifting the CSI 300 index approximately 32% in a six -day gain.

However, the story was not repeated this time. The reference index barely moved the day of the ad, adding only 0.61%, and increased almost Thursday. Hong Kong Hang Seng index won less than 0.4% during the two days.

The markets had a large extent in policies before the informative session, together with groups on the war on the second largest economy in the world, according to analysts.

The governor of the Popular Bank of China, PAN GongSheng, announced Wednesday to reduce key policy rates by 10 basic points and reduce the amount of cash that banks must have in 50 basic points. Among a series of measures, PAN said that the Central Bank will establish low -cost timbre facilities for bonds -related bonds and investments in advanced age consumption.

The stimulus was largely in line with the economic priorities established at the Politburo meeting of Leth. It was “nothing more than a Stopgap instead of a solution,” said Neo Wang, China’s main economist and strategist in Evercore Isi.

The second most powerful political body in China, last month, urged local authorities last month to prepare for “scenarios of worse cases” with sufficient planning, asking for an accelerated implementation of proactive fiscal and monetary policies. He also established plans to support the multipment for the technology sector, boost national consumption while stabilizing exports.

Without a specific mention of tariffs, the central government acknowledged that “external shock impacts” have intensified.

Unlike last September, when the PBOC “explicitly” supported the stock markets and provided direct finances for investments and repurchases of shares, this stimulus round is more aimed at industrial and social needs, said Eugene Hsiao, chief of China Equity.

For a significant manifestation, investors expect more specific fiscal measures that directly drive consumer feeling and more effective plans to underpin the real estate sector, said Hsiao.

Chinese political leaders, aware of the early economic data of the country, seemed to be increasing stimulation measures at a time when the economy has begun to feel the first strains of tariffs.

“China is responding to the obvious slowdown in economic activity,” said Thierry Wizman, Fx & Tasas global strategist in Macquarie.

While China’s economy expanded for a better 5.4% in the first quarter, now faces winds against winds against after the tariff conflict with the United States last month. In view of exorbitant rates, a series of large Wall Street banks cut the growth forecasts throughout the year of China to about 4%, significantly lower than the official growth target of around 5%.

China’s latest economic data have indicated economic deterioration. The manufacturing purchasing managers index fell to a minimum of 16 months, slid in contractive territory in April, with a meter of new export orders that fell to the lowest since December 2022. The activity of services in the country also decreased in April from the previous one.

China will launch its commercial data for April on Friday, which will probably reflect the total impact of tariffs on their departure shipments.

ANZS YEUNG estimates that export growth will fall by 2.2% in April, a strong decrease compared to 12.4% growth in March. The number of container ships from China to the United States was dramatically launched to 42 for the end of April since April 71, according to their estimates.

The concerns have the assembly of the leg that the consequences would spill to the labor market. The last PMI indicated that employment fell in all areas in April, since manufacturers began to stop production and put the paid license workers.

Goldman Sachs estimates that 16 million jobs-2% of the country’s workforce are involved in the production of products to the United States.

The recent revocation of the “minimism” rule of the United States that exempt low value goods from tariffs has also increased employment concerns in China’s intensive work sectors, particularly clothing and consumption electronics.

Beijing’s stimulus impulse ahead of commercial conversations between the United States and China that have increased the hope of a de -escalation in commercial tensions between the two countries.

“Any measure that can help China’s economy maintain growth in front of the import tariffs of the United States would increase China’s negotiation power in subsequent negotiations with the United States,” Macquarie’s Wizman said.

China confirmed on Wednesday that the vice president, He Lifeng, will meet with the United States Treasury Secretary, Scott Besent, a visit to Switzerland at the end of this week, while stating that Washington requested it. Trump did not agree with that characterization.

The planned meeting would mark the first high-level commercial conversations Us-China from the rates climbs this year.

While it is likely to reach an integral agreement to be complex and slow, a gradual reversal of both tariffs on both sides is possible, although analysts are divided to the rhythm of said decalcalation.

Robin Xing, chief economist of Morgan Stanley, projects that effective tariffs of Chinese products could be reduced from current levels to a terminal rate or 45% by the end of the year.

However, attempts to achieve a more comprehensive agreement, similar to the phase one agreement signed by Trump’s first term, will probably be “long long and possibly unproductive,” said Tiangen Xu, senior economist little intelligence force force force force force force force, force force force force force force force force force force force force force force force force force force for Forence Forence Forence Forence Forence Forence Forence Forence, Forence ForceiteiteiteiteiteiteiteiteiteiteiteiteIenneite Strategic Deriorities and Economic Red Lines.

China did not fulfill its commitment under the phase one agreement to buy $ 200 billion more in goods and services of the United States. In two years such as the Covid-19 Pandemia.

For the next rates meeting with Besent, China “does not believe that this talk leads anywhere,” said Wang Dan, Wang’s risk consulting firm, Eurasia Group. “Things could get worse and that is why they are keeping the great weapon for later,” he said, referring to possible stronger measures to support the Chinese economy.