SHANGHAI • Chinese regulators should step up support for the economy and keep ample liquidity in the financial system, Vice-Premier Liu He said yesterday, suggesting Beijing would soon unveil more policies to bolster growth amid rising US trade pressure.
Trade talks between the world's two largest economies collapsed last month, with US President Donald Trump accusing China of watering down its commitments. He has raised tariffs on Chinese goods and threatened even more.
Beijing has plenty of policy tools and is capable of dealing with various challenges, Mr Liu, who is also the lead negotiator in the US-China trade talks, told a financial forum.
Despite a slew of support measures and policy easing since last year, China's cooling economy is still struggling to get back on firm footing, and last month's sudden escalation in US-Sino tensions has raised fears of a full-blown trade war that could trigger a global recession.
Mr Liu's comments in Shanghai came a day after data showed China's credit growth was weaker than expected in May, reinforcing market expectations of more monetary easing. Factory activity contracted in May and imports fell the most in nearly three years, highlighting sluggish demand.
"At present, we do have some external pressures, but those external pressures will help us boost our self-reliance in innovation and accelerate the pace of high-speed development," said Mr Liu.
The government will announce more strong measures to promote reforms and opening up of its markets, added Mr Liu. The prospect of more economic support helped Chinese stock markets recover from early losses.
People's Bank of China chief Yi Gang last week said there was "tremendous" room to make policy tweaks if the trade war worsens.
Earlier yesterday, China Daily, citing economists, said Beijing is expected to adjust money and credit supply in coming weeks, including cuts to interest rates or reserve ratio requirements, to counter risks if the trade outlook deteriorates.
Also yesterday, the Commerce Ministry said Beijing will not yield to any "maximum pressure" from Washington, and any attempt by the US to force China into accepting a trade deal will fail.