By Brian Swint

China announced new stimulus measures and lowered interest rates on Wednesday as the trade war with the U.S. continues. It wasn't enough to lift some of the country's biggest shares.

The measures are the first to be announced since President Donald Trump unveiled his sweeping tariffs in early April. The levy on Chinese goods currently stands at 145% -- a level that even Treasury Secretary Scott Bessent says is "effectively an embargo.

China's central bank also took steps to allow banks to lend more as part of a package that the government said would stabilize the market. Still, economists said it wasn't a move that would do much to encourage consumers in the world's second-biggest economy to increase spending.

"It's no surprise that policymakers are now easing monetary policy to boost confidence, but the relatively small rate cut suggests they do not anticipate the near-term blow from tariffs to be especially severe," said Wei He, a strategist at Gavekal.

The Hang Seng index in Hong Kong closed 0.1% higher and the Shanghai Composite climbed 0.8%. Stocks with American depositary receipts were nevertheless falling. Retailers JD.com and Alibaba were down 0.9% and 1.8%, respectively, in Wednesday's premarket. Technology firm Baidu dropped 0.9%, while Tencent, which runs messaging services, was little changed.

U.S. stocks were reacting positively to news that Trump Administration officials will meet with Chinese counterparts in Switzerland this weekend. The hope is that the talks will be a first step in deescalating the trade war.

Write to Brian Swint at brian.swint@barrons.com

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May 07, 2025 07:25 ET (11:25 GMT)

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