“China does not accept any maximum pressure, threat or blackmail,” the spokesman said. “On major issues concerning our principles, we won’t back down even a little bit.”
The Reserve Bank of New Zealand was the latest to stun analysts on Wednesday, slashing rates by 50 basis points in response to “heightened global uncertainty reducing investment”.
The RBA, which held the cash rate at the record low of 1 per cent on Tuesday, has called for the Morrison government to borrow at low interest rates and increase infrastructure spending to stimulate jobs growth as it runs out of room to cut rates further.
“Governments here and around the world should have their top drawers full of really good ideas that are shovel-ready in case growth slows,” Dr Lowe said in June.
Mr Wilson said it seemed like RBA governor Philip Lowe “has thrown up his hands and said he has exhausted the options of monetary policy,” and that he was “sceptical the solution is simply to pump more money into the economy”.
The Liberal MP’s unusually direct comments come a day before he interrogates the governor at the House Economics Committee hearing in Canberra.
Mr Wilson said broader structural reform and further tax cuts needed to be considered because it was “almost impossible” to build more infrastructure in Melbourne and Sydney.
“The infrastructure sector is now going through its own equivalent of the mining boom where wages and equipment are in short supply,” Mr Wilson said.
Economists and Infrastructure Partnerships Australia have argued that quick-to-market projects, such as road-level crossings are a way of directly stimulating the economy and more money should be put into major projects in regional areas.
National Australia Bank chief economist Alan Oster said the government had a unique opportunity to spend quickly before the trade war pushes down iron ore prices further and eliminates the budget buffer.
Treasurer Josh Frydenberg called for calm and urged Australians not to overreact as he vowed to deliver a surplus come what may.
“We’ll still deliver a surplus next year,” he said. “Absolutely determined to do that.”
Labor leader Anthony Albanese said “the danger for Australia is the escalating trade conflict sees us as collateral damage” and infrastructure funding could be brought forward without putting the surplus at risk.
A Deloitte Access Economics report to be released on Thursday shows infrastructure investment is not forecast to reach its peak of $22 billion until 2022, when major projects such as the Melbourne and Sydney Metros reach the height of their funding.
The investment monitor report found business investment confidence has fallen to its lowest level in five years as a result of the trade fallout.
“There are doubts as to the ability of politicians to deliver a stable policy environment in which to do businesses,” the report found.
“The more political uncertainty that exists in the economy, the slower that any recovery in capital expenditure will be.”
Underscoring the tighter credit conditions, new figures from the Australian Bureau of Statistics on Wednesday showed loans to businesses fell 16 per cent in June.
The overall trend remains upwards but Commonwealth Bank economist Kristina Clifton said the drop was a sign of a lack of confidence.
“Weaker business lending may also be an early warning that Australian businesses are reacting to the more uncertain global backdrop and pulling back on spending,” she said.
At the same time, lending to households is picking up in a sign the property market appears to have bottomed.
Lending to owner‑occupiers rose by 2.4 per cent while lending to investors was up by 0.5 per cent.
The share of first home buyers has risen to a seven-year high, due to better affordability and state and federal government support.
A sustained up-tick is likely to see household consumption rise as fears of further house price falls are allayed.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.