China's top leaders plan to meet as soon as Wednesday to hammer out measures to boost the economy and stabilise capital markets, people with knowledge of the matter said, as trade war with the United States escalates.

Economists have warned that the fusillades on trade could shave one to two percentage points off growth this year in the world's second largest economy, worsen industrial overcapacity, put domestic jobs at risk, and further fuel deflationary forces.

The planned high-level gathering is the first to become publicly known since U.S. President Donald Trump clamped "reciprocal" tariffs on China last week, and follows Wednesday's near doubling to 104% in U.S. duties on imports from China.

Those expected to attend included senior officials from the State Council, or cabinet, as well as several government and regulatory bodies, said the two sources, who sought anonymity as they were not authorised to speak to the media.

The policymakers were expected to discuss measures to boost domestic consumption and support capital markets in China, the sources said.

Initiatives such as making rebates on export tax more attractive for domestic companies were also likely to figure in the talks, one of them added.

The State Council Information Office, which handles media queries for the Chinese government, did not immediately respond to a request for comment.

Trump's punishing tariffs have shaken up a global trading order that persisted for decades, fanning fears of recession and driving stocks down sharply worldwide.

For China, the trade war comes at a time when its economy is buckling under a protracted property crisis and high levels of local government debt, souring confidence among both businesses and consumers.

While Beijing unveiled counter-tariffs last week on the United States, vowing to fight what it viewed as blackmail, analysts say it is feeling cornered by Trump's tariff assault on China and any country that buys or assembles Chinese goods.

Top officials from government bodies, including the People's Bank of China, the central bank, and the finance ministry, were likely to attend the meeting, the sources said.

Chinese state media are expected to report part of the meeting's agenda as authorities aim to stabilise the economy and markets as well as restore investors' confidence, they added.

Officials of the commerce ministry, as well as banking regulator the National Financial Regulatory Administration (NFRA) and securities regulator China Securities Regulatory Commission (CSRC) were also expected to attend, the first source said.

The central bank, the ministries of commerce and finance and the regulators did not immediately comment.

SUPPORTING CONSUMPTION

Monetary and fiscal stimulus are unlikely to fully protect the Chinese economy, which ran a trillion-dollar surplus last year, from the severe downturn in global demand caused by the tariffs, they say.

The most helpful steps would be efforts to support household consumption, which, in China, runs at 20 percentage points below the global average.

Pressure has been building on Chinese officials for consumer-focused stimulus measures to cut the economy's reliance on exports and investment for growth, and Beijing has long promised such steps to make growth more sustainable.

But it has not yet announced any meaningful steps, aside from a consumer subsidy programme, which economists expect to have limited impact.

Some steps to stimulate the economy that are expected to be discussed at the meeting could be adopted in the coming weeks, the second source said.

Beijing was "fully capable of hedging against adverse external influences", Premier Li Qiang said on Tuesday, adding that China's policies this year fully take account of uncertainties.

On Wednesday, Chinese stocks recovered some ground as state pledges to support the local market and surging interest in domestic tech firms boosted sentiment after the latest tariff move.

The blue-chip CSI300 Index has slid more than 5% since April 2, when Trump imposed an additional tariff of 34% on Chinese goods, to give up all its gains this year, while Hong Kong's benchmark Hang Seng Index tumbled 13%.

Reuters

China plans high-level meet to craft support measures after US tariff hikes, say sources