China Intensifies Chip Import Controls

Days after US President Donald Trump threatened sweeping economic penalties on countries aiding Iran’s military in its conflict with the US and Israel, he clarified on Sunday that the warning also applies to China, according to The Economic Times. Trump had earlier said any country providing military equipment to Iran would face tariffs of up to 50% on all exports to the United States. “A country supplying military weapons to Iran will be immediately tariffed on any goods sold to the United States of America, 50%, effective immediately. There will be no exclusions or exemptions,” the US president said on his Truth Social platform. However, according to a Reuters report, Beijing has denied supplying arms to Tehran. The clarification came after the US and Iranian delegations failed to reach a peace deal following negotiations on Saturday.

The People's Bank of China (PBoC) withdrew cash from the financial system for the first time in a year, a cautious signal that keeps its policy options open as higher oil prices filter through the economy, as reported by Bloomberg. The central bank drained a total of CNY 890 billion ($129 billion) of liquidity via short-term open market operations in March and absorbed another CNY 250 billion through longer-term tools, including outright reverse repurchase agreements and the medium-term lending facility. According to Bloomberg calculations based on official data, commercial banks likely recorded their first net repayment of PBoC loans since last May. The withdrawal marks an abrupt reversal from months of liquidity buildup, as officials steer the economy amid a rebound in growth at the start of the year and rising oil prices.

The People’s Bank of China (PBOC) will continue to implement a moderately loose monetary policy in 2026 and will utilize tools such as reserve requirement ratio (RRR) cuts and interest rate reductions to ensure sufficient liquidity, according to central bank governor Pan Gongsheng, as reported by Xinhuanet. Monetary policy will focus on promoting stable economic growth and a reasonable recovery in prices, using both incremental and existing measures to create a favorable monetary and financial environment for high-quality development and the stable operation of financial markets, Pan told Xinhua in an interview. “There is still room for further RRR and interest rate cuts this year,” he said, adding that the PBOC will work to ensure the effective implementation and supervision of interest rate policies to keep overall financing costs at a low level. The central bank will also seek to enhance the flexibility of its monetary policy tools.