China’s GDP grew by 6.7% in the second quarter of 2018, which is slightly down from 6.8% in the first quarter. The impact of the intensified trade war seems to be modest on GDP growth, as the Chinese economy is no longer export-driven. It is the domestic consumption, which accounts for more than half of its GDP that contributes the majority of China's economic growth.
In contrast, the yuan exchange rate has been more dramatically affected. The yuan exchange rate has devalued 2% against the U.S dollar since the beginning of 2018 and more than 3% since the start of the trade war. It even tumbled more than 5% against US dollar -- the biggest slide since 2015 from mid-June to late-July, when the two countries fight on tariff ratchet up.
To handle the "uncertainties in the external environment" caused by trade war and reinvigorate the economic growth, China has announced a range of proactive fiscal policies including tax cuts, infrastructure spending and new loans to business. On July 23rd, The People's Bank of China (PBOC) decided to inject 502 billion yuan ($74.36 billion) worth of liquidity via the one-year medium-term lending facility (MLF) to support the country's financial institutions. It is the biggest-ever amount in such operation since MLF introduced in 2014. At the same time, the government plans to raise and spend 1.35 trillion yuan (about US$199 billion) for local government, designated for infrastructure. Right after the announcement, Chinese stock market cap biggest three-day rally since mid-August 2016.