China has kept its key lending rates unchanged for the sixth month in a row, with the one-year loan prime rate at 3.1% and the five-year rate at 3.6%. This decision follows stronger-than-expected GDP growth of 5.4% in Q1, giving China some room to hold off on more monetary easing for now.
Despite the growth, China is avoiding rate cuts to protect its currency, the yuan, and maintain bank profitability. Cutting rates could weaken the yuan further and hurt banks already facing low-interest margins.
Meanwhile, tensions with the U.S. have intensified. President Trump raised tariffs on Chinese goods to 145% and is pressuring allies to reduce trade with China. In response, China warned it will take countermeasures against any country that harms its interests by siding with the U.S.
Economists say China may only cut rates if the U.S. Federal Reserve does so first, to avoid worsening the yuan's stability. Some analysts also believe recent export data may not reflect real economic strength, as companies rushed shipments before tariffs took effect.
China’s Ministry of Commerce also criticized the U.S. for “unilateral bullying” and said it wants to defend fair global trade rules while preparing to protect its own interests.
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