China’s banking regulator has ordered banks to boost lending to infrastructure projects and exporters as the government seeks to bolster economic confidence on the eve of a new round of trade negotiations with the US. Chinese trade negotiators led by Wang Shouwen, vice commerce minister, are due in Washington for two days of talks starting on Wednesday, the first such discussions since the US imposed punitive tariffs on Chinese exports last month for alleged intellectual property theft.
Since the tariffs were announced on July 6, China’s currency and stock markets have suffered falls, reflecting investor nervousness about slowing economic growth and the longer-term impact of the trade war between the world’s two largest economies. The benchmark CSI 300, which tracks the biggest companies listed on the Shanghai and Shenzhen stock exchanges, has fallen more than 15 percent Pressure has also been building on the renminbi, which over the same period fell almost 7 per cent against the dollar to a low of Rmb6.93 on August 15.
The currency has since rebounded slightly as the People’s Bank of China introduced measures to curtail investors’ ability to short the currency. The Chinese government has recently taken steps to boost flagging investment, but stopped short of introducing extraordinary stimulus measures as it continued a campaign to contain financial sector risk.