China launches comprehensive measures to revive economy
- In Reports
- 04:02 PM, Sep 24, 2024
- Myind Staff
The Central Bank of China has unveiled a significant set of policies intended to boost the flagging economy of the nation. Governor of the People's Bank of China (PBOC), Pan Gongsheng, unveiled plans to reduce borrowing costs and allow banks to extend credit.
The decision was made in response to a string of unsatisfactory data points that raised expectations in recent months that the second-biggest economy in the world would fall short of its own 5% growth target this year. Following this announcement, stock markets throughout Asia surged.
Governor Pan announced that the central bank would lower reserve requirement ratios (RRRs), which are the minimum amount of cash banks are required to hold in reserve, during a rare news conference with representatives from two other financial regulators.
Initially, the RRR will be lowered by 0.5 percentage points, which is anticipated to free up roughly 1 trillion yuan ($142 billion; £106 billion). PBOC governor Pan went on to say that there might be one more cut made this year. Additional steps to stimulate China's real estate market during the crisis include reducing the interest rates on current mortgages and bringing down the required minimum down payment to 15% for all home types.
Since 2021, China's real estate market has been experiencing a severe downturn. Unfinished construction projects and a significant number of unsold homes remain a major problem after the collapse of several developers.
A few days ago, the US Federal Reserve cut interest rates for the first time in over four years, and it did so more sharply than usual. This was followed by the PBOC's new economic stimulus measures. Major stock indexes in Shanghai and Hong Kong were up over 3% during afternoon trading hours in Asia.
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