Even as tariffs start to weigh on China, policymakers seem to be in no hurry to roll out the type of "shock-and-awe" policy blitz unveiled last fall to help stabilize a sputtering economy.

At a key political meeting last week, officials characterized the trade dispute with the U.S. as a "combat" situation but refrained from announcing a battle plan beyond saying they are ready to dial up fiscal and monetary support. A follow-up briefing on Monday sent the same signal of incremental, not big-bang, stimulus.

Economists say Beijing is in wait-and-see mode given the lack of clarity on U.S. trade policy. President Trump has paused some tariffs on other countries and announced exemptions for some products, and a softened tone on China recently has raised some hopes that a trade deal with Beijing could be struck.

"The situation is still quite fluid, as Trump has sent a series of signals of de-escalating the U.S./China trade war," economists at Nomura said in a note.

Chinese leaders have said that signs of economic stress are emerging but likely want more time to assess the damage.

"As the tariffs are truly unprecedented, there is no way to estimate the immediate and long-term impact of the newly imposed tariffs," the Nomura economists said.

Beijing wants to show that it's calm and well-prepared, and has enough bargaining chips, they added.

Policies introduced earlier this year could also give Beijing some time to plot its next move.

In March, Beijing approved more measures to help boost demand in the economy, including expanded consumer goods trade-in and equipment upgrade programs, Goldman Sachs economists said in a note. China also has around $1.194 trillion of its annual government bond issuance quota left to deploy as needed, they added.

Moving too cautiously carries its own risks, analyst say.

"The risk is that the government might slip behind the curve as it waits, leading both market and household sentiment to suffer," Gavekal Dragonomics economist Wei He said.

"Policymakers may assess that the economic risks are manageable so far, but the worst effects of the trade war are yet to be felt," He added.

Equities markets fell after the Politburo meeting last week, signaling disappointment at the outcome of the first gathering of the decisionmaking body since tariffs were announced.

Goldman Sachs economists expect Beijing to act more strongly in the July Politburo meeting, which will take place after the release of economic data for the second quarter that is likely to show a marked slowdown in the second quarter.

"There is also a possibility for policymakers to double down on easing pledges before July should macro data and the labor market situation worsen faster and more significantly than expected," they said.

Write to Singapore editors at singaporeeditors@dowjones.com

(END) Dow Jones Newswires

April 28, 2025 05:17 ET (09:17 GMT)

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