Navigating Economic Turbulence: China’s Trade Truce and Stimulus Measures Amidst Deepening Challenges
China Extends Trade Truce and Launches Stimulus Efforts Amid Economic Challenges
By Bob Mason
Published August 14, 2025, 02:33 GMT
China faces growing money stress. It extends the trade break with the United States and starts new money plans to fuel local buying. New facts show Beijing may not meet its 5% growth goal for 2025. ### Trade Truce Extended
On August 11, Beijing and Washington agree to keep the trade break for 90 more days. Both sides avoid a hard trade fight that might shake world markets. Investors feel a careful hope in the market.
New Stimulus Measures to Boost Consumption
The country sees slow money movement. The Finance Ministry explains plans that focus on personal buying. The plan gives loan interest cuts on personal loans. These cuts work from September 2025 to August 2026. Borrowers may get cuts up to 3,000 yuan per lender. The goal is to spur buying in cars, elder care, education, home fixes, and electronics.
Some experts worry about the plan. David Scutt, a market analyst at Stone X and Forex.com, says, "China has talked about sparking buying for years with a plan on consumer loans. You can bring a horse to water, but it might not drink. The loan use depends on confidence."
Economic Data Reflect Growing Strains
Economic signs show a tough time. The S&P Global China General Manufacturing PMI falls from 50.4 in June to 49.5 in July. New export orders drop. Factories see higher costs for materials and lower prices for goods. Some cut jobs to keep costs low.
Retail sales grow 4.8% year-over-year in June, down from 6.4% in May. The official urban jobless rate stays at 5%. Other data from factory surveys hint at rising job loss risks as the third quarter goes on.
Lower house prices, heavy factory issues, and a slow work market keep buyer mood low. These signs show Beijing struggles to boost strong local buying despite new plans and a calm trade tie.
Youth Unemployment and Labor Market Pressures
Young job loss remains a hard risk. Even if the main urban rate stays steady, youth unemployment is high at 14.5% in June. Alicia Garcia Herrero, Chief Economist for Asia Pacific at Natixis, points out that factory workers face steep job cuts. She notes a drop in prices and wages that falls too low.
She says, "China’s factory workers hurt while exports – and even the economy – keep growing despite U.S. taxes on goods. The plan seems off if exports fall short of covering costs." She adds that some workers see fewer hours or time off without pay instead of full job loss.
Almost 30% of China’s workers are in making, building, or mining jobs. These sectors face hard times. But the service sector, which employs nearly half the workers, shows hope. The S&P Global China Services PMI moves from 50.6 in June to 52.6 in July. Service companies see more outside demand and add jobs. This part of the economy shifts toward growth led by buying.
Market Response and Outlook
Markets cheer the trade break news and Beijing’s new money plans. The CSI 300 and Shanghai Composite Index show gains in August. The Hang Seng Index, in particular, jumps more than 28% so far this year.
Now, all eyes look to the key money data coming on August 15. This data tells if Beijing’s steps can keep growth and jobs stable. If the new data shows more low numbers in job counts, store buying, and making goods, investors might lose hope and see more market swings.
Conclusion
The extended US-China trade break and new Chinese money plans bring hope. Yet, challenges remain. Rising job loss, slow local buying, and weak factory work all stand in the way of the 5% growth mark in 2025. Investors and makers of rules wait for new data to see if Beijing’s moves work and to plan the next steps in a changing set of global and home challenges.
For continuous updates on China’s trade rules and data news, follow FX Empire’s live coverage and check the money schedule.
