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Investing.com -- In response to a prolonged trade war with the United States, the People’s Bank of China (PBOC) announced on Friday that it will encourage financial institutions to increase support for consumption and foreign trade. This move comes as part of a broader effort by Beijing to mitigate the economic impact of the tariff conflict with Washington.
Earlier this week, China’s capital announced a series of stimulus measures designed to cushion the economic blow. These measures included interest rate cuts and a significant injection of liquidity.
According to its first-quarter monetary policy report, the PBOC will maintain a flexible approach, adjusting the intensity and pace of policy implementation based on domestic and global economic conditions as well as financial market developments. The central bank will guide financial institutions to increase support for consumption, foreign trade, tech innovation, and small businesses.
In addition to these measures, the PBOC plans to use a combination of policy tools, such as reserve requirements, re-lending and open market operations, to ensure ample liquidity. The bank will also use targeted policy tools to provide low-cost funding support for key consumption sectors.
The PBOC also stated it will issue guidelines for consumption finance, directing banks to enhance services with a focus on key sectors like tourism, hospitality, entertainment, education, and household services. The bank also plans to increase funding for consumption infrastructure and logistics.
On the same day, the central bank also revealed a 500-billion-yuan re-lending facility for elderly care and services consumption.
In its report, the PBOC reaffirmed its commitment to keeping the yuan basically stable and preventing currency overshooting risks.
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