While Wall Street is still debating whether the Federal Reserve will cut interest rates, China’s central bank has already quietly released a 1 trillion yuan stimulus package. Gold prices have surged past $3,600, U.S. stocks tumbled, while Chinese assets rallied. A global “economic drama” is unfolding.
Fed Rate Cut Expectations Rise
Fresh U.S. labor market data confirmed a cooling trend, leading markets to almost unanimously expect the Fed to start cutting rates in September.
Amid this dovish outlook and growing risk aversion, spot gold broke through the $3,600 mark. The three major U.S. stock indexes all declined, while Chinese assets climbed against the tide — a clear sign that investors are reassessing global asset allocations.
China’s Central Bank Injects a Trillion Yuan
On September 5, the People’s Bank of China (PBoC) announced a 0.5 percentage point cut in the reserve requirement ratio (RRR), releasing about 1 trillion yuan in long-term funds.
On the same day, the PBoC also carried out a 1 trillion yuan buyout-style reverse repo operation with a three-month term. Analysts note this move was designed to ease potential liquidity strains, especially as September marks a peak in government bond issuance and 3.5 trillion yuan in interbank certificates of deposit are set to mature.
For the real economy — particularly small and medium-sized enterprises — this injection is a powerful boost.
Trump’s Rare Four-Word Description of China
On September 4, Trump hosted U.S. tech executives at the White House. Later, he posted on social media, describing China as “deep and unfathomable.”
This unusual phrasing sparked heated debate in the U.S. media. Commentators argued it reflected growing anxiety over China’s rise and Washington’s waning influence in key regions.
Trump also complained that China’s WWII commemoration “did not highlight U.S. support,” and controversially labeled Japan as “a very unfriendly foreign aggressor,” drawing attention in both the U.S. and Japan.
Pragmatic China vs. Hesitant U.S.
Trump’s remarks contrasted sharply with Beijing’s practical monetary policy.
- The U.S. is still debating rate cuts, while China has already injected trillions into the market.
- Gold is surging and U.S. stocks are sliding, but Chinese assets are attracting inflows.
- The U.S. economy struggles under high interest rates, while China actively strengthens resilience through monetary easing.
This explains why Trump might call China “unfathomable”: China is advancing not just economically but also in military, technological, and cultural domains.
Signals of a Reshaping Global Order
- United States: Stuck with high interest rates, cooling labor markets, and inflation concerns.
- China: Injecting liquidity, stimulating domestic demand, and stabilizing growth.
- Global Markets: Investors shifting allocations, with more capital potentially flowing into China and emerging markets.
Looking forward, the Fed’s eventual rate cut could spark fresh global volatility. Yet China’s trillion-yuan “firewall” has already strengthened confidence in its economic trajectory.
