Chinese Premier Li Qiang announced on May 26, 2025, that China is considering implementing new economic policy tools, including unconventional measures, to address disruptions in the global economic and trade order. Speaking at a symposium with Chinese companies in Jakarta, Indonesia, Li emphasized that increasing trade barriers and the fragmentation of industrial and supply chains are significantly impacting global economic development. He stated that China is exploring new strategies that will be deployed as circumstances evolve. Additionally, Li reaffirmed China's commitment to enhancing economic cooperation with other nations to bolster the international growth of Chinese businesses. The symposium included key Chinese firms such as Huawei, SAIC Motor, and New Hope Group. Premier Li's remarks came during his three-day visit to Indonesia, which concluded on May 26, 2025, after which he attended the ASEAN-GCC-China Summit in Malaysia.

This announcement underscores China's proactive approach to mitigating the adverse effects of escalating global trade tensions and internal economic challenges. The ongoing trade disputes, particularly with the United States, have led to increased tariffs and trade barriers, disrupting global supply chains and economic stability. Domestically, China faces a property sector crisis and weak household consumption, further complicating its economic landscape.

In April 2025, China's industrial profits showed a notable increase, reflecting a positive impact from recent government stimulus measures despite ongoing trade tensions with the United States. Data from the National Bureau of Statistics (NBS) revealed a 3.0% annual profit rise in April alone, with cumulative growth of 1.4% in the January-April period, up from 0.8% in Q1. High-performing sectors included new energy, new materials, and high-end manufacturing, benefiting from China’s targeted industrial policies. Since September, authorities have implemented various stimulus actions, such as interest rate cuts and liquidity infusions, to bolster domestic demand and investor confidence. Nevertheless, Moody’s has maintained a negative outlook for China due to the uncertainty of the global trade environment, though it recognized improvements in managing state-owned enterprise and local government debt risks. Notably, profits for state-owned enterprises fell by 4.4%, while private and foreign firms saw gains of 4.3% and 2.5%, respectively. Despite a temporary trade truce with the U.S., analysts warn of potential setbacks, including the risk of significant job losses if exports to the U.S. decline substantially. Mixed economic signals – such as strong exports but weakened factory output, retail sales, and lending – underscore continuing challenges for China’s recovery.

In response to these challenges, China has implemented several policy measures:

• Interest Rate Cuts: On May 20, 2025, the People's Bank of China reduced the one-year and five-year loan prime rates (LPR) by 10 basis points to 3.0% and 3.5%, respectively, marking their lowest levels since the LPR mechanism was reformed in 2019. Major state-owned banks also trimmed deposit rates by 5 to 25 basis points. These measures aim to encourage credit lending and consumer spending without heavily impacting commercial bank profitability.

• Fiscal Stimulus: Beijing launched a RMB 14.3 trillion local government debt restructuring plan, with RMB 6 trillion addressed through one-time central government support, easing repayment burdens and creating fiscal room for further growth initiatives. The government also raised its fiscal deficit target for 2025 to 4.0% of GDP, up from 3.0% in 2024. This will be financed through RMB 1.3 trillion in special sovereign bonds and RMB 4.4 trillion in local government bonds, primarily allocated toward infrastructure projects and consumption subsidies.

• Industrial Policy: China continues to advance its "Made in China 2025" initiative, aiming to upgrade its manufacturing capabilities and reduce dependence on foreign technology. The plan focuses on sectors such as semiconductors, electric vehicles, and robotics, with the goal of increasing the domestic content of core materials to 70% by 2025.

Premier Li's visit to Indonesia and subsequent attendance at the ASEAN-GCC-China Summit in Malaysia underscore China's commitment to strengthening regional economic ties. During his visit to Kuala Lumpur, Li met with Malaysian Prime Minister Anwar Ibrahim and called for enhanced trade and investment relations. He emphasized the importance of defending free and multilateral trade amidst growing global protectionism and economic sluggishness. Li advocated for deeper cooperation among China, ASEAN, and Gulf Cooperation Council (GCC) nations to address global challenges and promote open regionalism. ASEAN is China's top trading partner, with bilateral trade reaching $234 billion in the first quarter of 2025. China is also the largest trading partner of the GCC, with total trade valued at $298 billion in 2023, and the GCC supplying 36% of China’s crude oil imports.

The consideration of new economic policy tools reflects China's proactive approach to mitigating external economic pressures and internal challenges. By exploring unconventional measures, China aims to stabilize its economy, protect employment, and maintain social stability. However, the effectiveness of these measures will depend on their implementation and the evolving global economic landscape.

As China navigates a complex global economic landscape marked by trade tensions and internal challenges, its consideration of unconventional economic policy tools signifies a strategic shift toward greater economic resilience and international cooperation. The effectiveness of these measures will depend on their implementation and the evolving global economic environment.