China will lower interest rates and inject some much-needed liquidity into its domestic economy as the country wreaks on the trade war with the United States.

The People's Bank of China said on Wednesday it would cut the bank's reserve ratio, benchmark interest rate and the bank reserve ratio that released 1TN yuan (£103.6 billion).

People's Bank of China Governor Pan Gongsheng said China also lowered key interest rates by 0.1 percentage point.

Pan said the "medium relaxation" measures were a response to the global economy, "full of uncertainty, economic divisions and increased trade tensions."

China's economy is under enormous pressure as it faces tariffs of 145% of its exports to the United States. China has relied on exports in recent years, especially on the world's largest consumer markets, but they still account for 15% of the country's GDP.

Beijing and Washington are in Logan, who will blink in a trade war that shocked global markets and threatened to severely weaken China and the U.S. economies.

Since Donald Trump took office in January, the U.S. has announced tariffs, especially against China, which is a 125% response to U.S. goods.

Since Trump's "Liberation Day" announced on April 2, senior Chinese and U.S. officials will meet in the coming days to discuss how to reduce the trade war.

He will meet with U.S. Treasury Secretary Scott Bessent at a meeting in Switzerland over the weekend.

But while the trade deal remains a distant prospect, China is trying other measures to improve its slow economy. It is particularly focused on increasing consumer spending.

Pan said on Wednesday that the cost of borrowing from a government-backed home purchase program will drop to 2.6% to "help the real estate market stabilize."

Real estate was once the backbone of China's economy, accounting for one-third of GDP, but in recent years a series of regulatory and economic challenges have hit the industry, making consumers willing to provide dispatches for new homes. In the first three months of this year, real estate sales of floor area fell 3%, while investment in the industry fell 10%.

Capital Economics, a financial research firm, said the economic impact of monetary stimulus “will be positive but moderate” because the main limit on credit is demand, not supply.

Reuters contributed to this report