The Chinese central bank has implemented an outstanding variety of measures with the objective of reviving the country’s ailing economy.
The governor of the People’s Bank of China, Pan Gongsheng, revealed plans to reduce borrowing rates and give banks more authority to expand lending (PBOC). These steps were taken because China’s ability to meet its 5% annual growth target has been called into question due to disappointing economic data.
Asian stock markets surged following the announcement.
Mr. Pan announced that the reserve requirement ratio (RRR), or the amount of cash banks are required to have in reserve, would be lowered by the central bank during a rare press meeting with representatives from other financial regulators. The first time this happens, the economy will gain about 1 trillion yuan ($142 billion; £106 billion) as a 0.5 percentage point decline. Mr. Pan made a suggestion that there might be more cuts made later in the year.
Further steps are intended to revive China’s housing market, which has been in decline since 2021. A couple of these are bringing down the interest rates on current mortgages and bringing down the required 15% down payment for all residences. There have been multiple developer collapses in the real estate business, resulting in unfinished projects and unsold residences.
Following its first interest rate decrease over four years, the US Federal Reserve has just released this stimulus proposal. Shanghai and Hong Kong’s main indexes surged by over 4% as a result of the statement, which set off a positive trend in the stock market.
By putting these harsh measures in place, China hopes to fix the problems that major industries like real estate are facing and get its economy back on track.
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