Illustration: Xia Qing/GT

China's monetary and financial authorities on Wednesday unveiled supportive measures that cover various aspects of the economy, including monetary policy and the stock, foreign exchange, bond and real estate markets. This package is notable for its intensity and targeted approach, sending a powerful policy signal that is expected to further boost confidence and stabilize expectations.

Why did China launch this package of policies at this time? The Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting on April 25, emphasizing the need to "focus on keeping employment, businesses, markets and expectations stable." The introduction of this financial policy package aligns with the emphasis proposed in the meeting. In the face of a complex and severe external environment, stabilizing employment, businesses, markets and expectations provides a solid foundation for the Chinese economy.

In April, the manufacturing Purchasing Managers' Index (PMI) stood at 49.0, a decrease of 1.5 from the previous month, indicating a slight decline in manufacturing sentiment. This may reflect that the market has begun to feel external pressures. Entering the second quarter, the impact of US tariff policies on international trade is gradually becoming apparent, and the international economic situation is becoming increasingly complex. While China's economy, particularly the foreign trade sector, may be affected, its ability to withstand external shocks and its resilience remain strong.

In the first quarter, as various macro policies continued to take effect, the national economy started off smoothly and showed a positive trend, with an enhanced role of innovation and accelerated fostering of new economic drivers.

First, during the recent global financial market turmoil triggered by US tariff policies, the exchange rate of the yuan remained stable overall. The two-way fluctuation of the yuan exchange rate is a normal market situation and reflects the supporting role of economic fundamentals.

Second, in the first quarter, retail sales reached 12.47 trillion yuan ($1.72 trillion), a year-on-year increase of 4.6 percent. With the continued implementation of policies to boost consumption and the accelerated application of new technologies such as artificial intelligence (AI) in the consumer sector, the consumption market is expected to continue to show stable development, providing strong support for a sustained economic recovery.

Third, under the influence of policies, the real estate market has continued to stabilize, with transactions improving. Data from the National Bureau of Statistics show that in March, housing market activity increased, with more cities among the 70 large and medium-sized cities reporting month-on-month increases in residential sales prices.

Since the beginning of this year, global trade protectionism has rapidly intensified, and the US imposition of tariffs has brought about many uncertainties, making the external environment increasingly complex and severe. However, regardless of how the external environment changes, we see that the overall trend of the stable operation of the Chinese economy has not changed. As existing and new policies continue to take effect, although there may be challenges in some areas, the overall trend of stabilization and improvement in China's economy is expected to continue to strengthen.

China's economy has shown strong resilience in overcoming external pressures. To some extent, it is more capable of withstanding the tariff conflicts instigated by Washington compared with the US. China has maintained its position as the world's largest manufacturing country for 15 consecutive years. China is the only country in the world that possesses all industrial categories listed in the UN's industrial classification. 

China has significant advantages in manufacturing and the entire industrial chain. If the US attempts to create difficulties for China in the manufacturing sector through tariffs on goods, China actually has strong capabilities to respond and counteract in this area. In contrast, the US manufacturing sector is relatively weak, with its economic advantages primarily concentrated in the services sector, especially in finance and related fields.

In the face of global supply chain challenges and rising global economic uncertainty caused by US import tariffs, the foundation for China's economic development remains relatively solid. Although there may be certain pressures in areas such as foreign trade, it is unlikely that China's economy will deviate from its stable development trajectory. At this time, the financial sector's powerful "combination punch" sends a strong signal to stabilize the market and expectations, further solidifying the stable development of China's economy.

The author is director and chief economist of Guangkai Chief Industry Research Institute. bizopinion@globaltimes.com.cn