(April 10): A Chinese state newspaper suggested it’s time to ease monetary policy to support the economy, as rising trade tensions with the US threaten its growth outlook.

The Securities Daily published a front-page commentary on Thursday saying it is an appropriate time for the Chinese central bank to cut interest rates and banks’ reserve requirement, a sign Beijing may soon move to offset headwinds brought on by soaring tariffs.

Easing can “effectively alleviate sudden external shocks, send out strong policy signals, help boost social confidence and stabilise market expectations”, the state-owned financial newspaper said.

Chinese stocks rose for a third day, reflecting continued investor expectations of more stimulus support from Beijing as well as hopes for a possible trade deal with the US.

The urgency for greater stimulus increased after US President Donald Trump raised duties on Chinese imports to 125% on Wednesday, while pausing levies on dozens of trade partners. Data released on Thursday showed China’s consumer deflation extended for a second month in March, another warning sign for the world’s second-largest economy.

The People’s Bank of China has vowed to lower borrowing costs and the amount of cash banks must keep in reserve at an appropriate time four times since March, the piece noted. The central bank this week also pledged support for a sovereign fund to help stabilise the capital markets. 

Growing expectations of reserve requirement ratio and interest rate cuts helped fuel the recent rally in China’s bond market, the Securities Daily said in another article.

Uploaded by Tham Yek Lee