China is preparing for the trade war with the United States

CHINA (AFP) –

The Chinese authorities are preparing to face a possible trade war that has already plummeted the stock markets and the yuan and could affect the Asian giant's economy.

The US administration could impose In early July, tariffs on Chinese imports reached $ 34 billion.

A prospect that has already reduced the Shanghai stock market by 8% over the past two weeks and has also put the yuan, the Chinese currency, under pressure at its lowest level since November 2017.

"The Chinese growth could be reduced by 0.3 point in 2019, but the impact could be much larger "and would affect both multinationals and markets and investors by" uncertainty "over the trade war, says Gregory Daco, consultant of Oxford Economics

After the fall of 4% of the stock market of Shanghai on June 19, following the new threats of Donald Trump, the governor of the central bank (PBOC) called for a "calm and rationality" for investors. Lee: Why are markets afraid of US restrictions on China?

In addition, the PBOC announced Sunday the reduction of 50 basis points of the percentage. Obligatory reservations from most Chinese banks, a measure that wants to boost credit to small businesses with a total of 700,000 million yuan (91,000 million euros).

"It's fresh money for the real economy, a strong signal from Lu Ting, an analyst at Nomura Bank.

The measure will begin to be applied on July 5, a day before the possible entry into force of US tariffs.

However, this injection of liquidity contrasts with the Chinese government's policy in recent months to try to fight against excess indebtedness. 19659003] "This is a sign that authorities are concerned about the risk of economic slowdown, caused by drastic debt relief efforts," says Julian Evans-Pritchard, consultant Capital Economics.

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"The biggest threat remains the tightening of access to credit (…) and should curb the economy. activity more pronounced than the authorities willing to accept, "he added. he.

Meanwhile, industrial production and investment fell in May, two signs of the slowdown in the world's second largest economy

In 2018, the Beijing government set a growth target of 6.5%.

For the moment, the central bank's measures have failed to calm the stock markets or convince analysts.

All this put the Chinese authorities in a complex situation, in which they try to support the economy and businesses. In addition, they want to reduce the overall level of indebtedness of the country.

The combination of colossal debt, constant corporate bankruptcies, stock market turmoil and trade tensions could cause a "financial panic," warns the National Institution for Finance and development, an influential Chinese strategic firm.

According to a note disclosed by Bloomberg the institution believes that the priority of Chinese financial and economic authorities in the coming years should be "to prevent [el pánico financiero] and to spread".