Arjen van Dijkhuizen, senior economist at ABN AMRO point out that on the monetary front, the Chinese authorities have taken several measures to safeguard liquidity in the banking system and stimulate lending, particularly to private firms and SMEs.

“On the fiscal front, the government opted for a broad range of tax cuts and a doubling of bond issuance quota for local governments (hit by previous financial deleveraging). All in all, Beijing has opted for what we call a piecemeal approach of monetary and fiscal easing, not for big bazooka forms of stimulus (that was not needed and would run counter to longer-term goals such as stabilising leverage). That said, Beijing still has sufficient room for further policy easing in our view, and we expect the authorities to use that room. The PBoC could opt for further RRR cuts or, if needed, even lower the benchmark policy rate (that has been kept on hold on 4.35% since 2015), while allowing overall debt levels to pick up again somewhat. In addition, a renewed weakening of the yuan would also help to offset the impact of tariffs.”