China should inject up to 1.5 trillion yuan (about $209 billion) into its economy over the next 12 months to support consumer spending and reduce the impact of U.S. tariffs, according to Huang Yiping, an adviser to the People’s Bank of China (PBOC), and other economists.
The experts say China’s economy is facing new challenges such as falling prices (deflation), a weak property market, and lower exports due to U.S. tariffs of 20% to 30%.
To help the economy, they suggest:
Cutting key policy interest rates.
Asking banks to lower the Loan Prime Rate (LPR).
Allowing the yuan to move freely to absorb global economic shocks.
They also recommend deeper reforms, like:
Widening the personal income tax base.
Making the value-added tax (VAT) system simpler.
Reducing financial risks from small and medium-sized enterprise (SME) loans, which now make up over 60% of China’s GDP—more than the country’s local government debt.
The report highlights that without strong action, these issues could slow down growth and create more risks in the future.
