China has accelerated the implementation of its 2025 stimulus plan but has chosen not to introduce new measures for now, expecting the US to back down first in the protracted trade war. The Communist Party Politburo has only pledged to support sectors and workers affected by high US tariffs, but has not announced additional spending, disappointing markets and causing Chinese property stocks to fall 3%.
Although no new measures were announced, Beijing has not changed its economic growth target of around 5% this year. Its strategy is to remain flexible, avoiding announcements that could erode confidence, while assessing the development of the tariff war. Fiscal data shows that China has increased government spending and expanded social financing to support the economy, but remains cautious about introducing additional monetary easing.
Policy advisors insist that Beijing has “policy reserves” and is ready to launch additional measures if needed, but stress the importance of maintaining policy flexibility. The People’s Bank of China has also postponed any interest rate cuts or reductions in banks’ cash reserves until there is clarity on the true impact of the tariffs on the economy.
Even as the Trump administration has begun to show a more dovish tone, Beijing has chosen to avoid any signs of weakness. Economists warn that without new stimulus, China risks a bigger economic shock in the near future. But for now, China’s strategy is to wait and see and let the United States feel the pressure first, a big gamble with high risks.
