The Chinese administration must take action “rapidly in the coming weeks to introduce supplementary measures if they intend to reach the 5 percent goal” https://t.co/IjXIrC2nwj via @ft
— Oliver Stuenkel ?? (@OliverStuenkel) September 24, 2024
The central bank of China revealed a set of initiatives on Tuesday designed to simplify the borrowing process for families and businesses. This represents the most significant effort by Chinese officials since the onset of the pandemic to rejuvenate economic activity, stabilize the housing sector, and curb a widespread drop in prices. The People’s Bank of China lowered short-term interest rates and rates for existing home loans, minimized the required down payments for property purchases, and empowered the country’s state-controlled commercial banks to lend a greater share of their resources.
China has intensified actions to support its struggling property sector. This strategy highlights Beijing’s urgency to counter a housing-driven downturn. https://t.co/JQZAZctETV
— Javier Blas (@JavierBlas) September 24, 2024
In a rare media briefing, Pan Gongsheng, the central bank governor, stated that his institution was prepared to enable banks to extend even more credit if necessary.
Introduction of Economic Stimulus Initiatives
Just days after cutting short-term borrowing rates by half a percentage point, the Chinese central bank further reduced its benchmark seven-day interest rate to 1.5 percent from 1.7 percent.
#China’s central bank has announced a significant series of initiatives intended to invigorate the nation’s sluggish economy https://t.co/OrzliwVfHG
— Felipe Sahagún (@sahagunfelipe) September 24, 2024
Moreover, the People’s Bank of China instructed commercial banks that they would be permitted to decrease the reserves they hold by half a percentage point. This action is anticipated to enable banks to extend an additional $140 billion in loans to businesses and households. The central bank also facilitated lending to companies for share buybacks and major shareholders to increase their stakes in firms, both techniques that usually enhance stock values.
