China is signaling that it is worried about its economy.
Beset by slowing growth, a persistent problem with debt and potential harm from President Trump’s trade war, the Chinese government has taken steps in the past few months to shore up a decelerating economy. It has pared back a high-profile campaign to tackle debt. It has restarted its traditional engines of growth through big government-led infrastructure projects. It has even censored bad economic news.
On Sunday, Beijing went one step further.
The People’s Bank of China, the country’s central bank, pulled a financial lever that will effectively pump $174 billion into the Chinese economy. The move is aimed at giving a helping hand to China’s small and medium-sized business in particular, which have had a hard time getting loans and face other rising business pressures.
The move signals that China’s economy “is really not doing well,” Chen Shouhong, the founder of the investment information platform Gelonghui, wrote on WeChat, a popular Chinese social media platform.
The growing trade war with the United States has been the most visible threat. In September, the United States imposed tariffs on $200 billion in goods from China. President Trump has shown little inclination to back off and relations between the two countries have cooled, suggesting the intensifying trade war could get worse before it gets better.
But China has bigger problems than the trade war.
Consumers are spending less. Retail sales this year have grown at the slowest rate in a decade. Wage growth is plodding. Infrastructure investment — a pillar of the Chinese economy — slowed significantly in the first half of the year. The pace at which companies defaulted on their bonds has quickened.
China also has to contend with a stock market that has fallen by around 15 percent this year and a currency that has lost 10 percent of its value against the dollar. Some Chinese entrepreneurs also say the business environment is souring. The government could soon require companies to pay more in taxes and benefits.