- China unveils measures to boost economy
- Plans include lowering borrowing costs and boost lending by allowing banks to increase their loan offerings
- In addition, they will introduce measures to tackle the ongoing crisis in China’s property sector
China unveils measures to boost economy
China’s central bank has announced a sweeping set of measures aimed at revitalising the country’s slowing economy. The People’s Bank of China (PBOC), led by Governor Pan Gongsheng, outlined plans to lower borrowing costs and boost lending by allowing banks to increase their loan offerings.
This comes in response to a string of disappointing economic data, raising concerns that China, the world’s second-largest economy, may fall short of its 5% growth target for the year. Following Pan’s announcement, stock markets in Asia surged, with major indexes in Shanghai and Hong Kong climbing over 3%.
At a rare press conference alongside officials from other key financial regulators, Pan revealed that the PBOC will cut the reserve requirement ratio (RRR) – the amount of cash banks are required to hold in reserve. The initial reduction of half a percentage point is expected to inject around 1 trillion yuan ($142 billion) into the economy, with the possibility of further cuts later in the year.
In addition to easing lending restrictions, the PBOC introduced measures to tackle the ongoing crisis in China’s property sector. These include lowering interest rates for existing mortgages and reducing the minimum down payment for all home purchases to 15%. China’s real estate market has faced severe challenges since 2021, with several major developers collapsing and leaving numerous projects unfinished.
This stimulus package from China follows the US Federal Reserve’s recent decision to lower interest rates for the first time in over four years, signalling a global trend of monetary easing.