China's Economic Firepower: Stimulus Measures Aim to Tackle Trade War Fallout

China unveiled a series of economic stimulus measures Wednesday, including interest rate cuts and significant liquidity injections, in an effort to cushion the economic impact of the ongoing trade war with the United States. This comes as Chinese and U.S. officials prepare to meet for crucial trade discussions this weekend.

The proposed talks in Switzerland offer a fresh opportunity for both nations to ease the prolonged tensions characterized by retaliatory tariffs that have unsettled global markets and disrupted supply chains. Economic data indicate that China's industrial activity has contracted sharply, as evidenced by the fastest decline in 16 months recorded last April.

To tackle this downturn, China's central bank is set to lower the borrowing cost of its benchmark interest rate while reducing the reserve requirement ratio for banks, thereby flooding the market with liquidity. The economic measures aim to strengthen China's position in upcoming trade negotiations, with potential reductions in tariffs on the agenda.

(With inputs from agencies.)