China Holds The Line: Navigating Trade Wars and Stimulus Strategies

China is advancing stimulus plans but refrains from new measures amid a trade war with the U.S. The Politburo supports firms impacted by U.S. tariffs but avoids further deficit spending. Analysts suggest China's flexible strategy intends to maintain growth despite tariff impacts from President Trump's administration.

China has refrained from introducing new stimulus measures despite advancing plans to tackle challenges posed by the ongoing trade war with the U.S. According to high-level sources, the Communist Party is focusing on more adaptable strategies while choosing not to escalate deficit spending.

The Politburo, the country's influential decision-making body, has pledged support for businesses hit hard by U.S. tariffs, yet no new spending measures have been announced. This decision has led to a notable drop in Chinese real estate stocks, underscoring investor concerns about potential growth slowdowns.

While Beijing bets that the U.S. will back down first, Larry Hu, chief China economist at Macquarie, notes that China's restraint is a carefully calibrated move to maintain flexibility. As fiscal pressures mount, analysts believe more robust stimulus measures could be rolled out if the situation with the U.S. tariff war deteriorates.

(With inputs from agencies.)