China’s economy has been weakening since the Corona pandemic. Previous attempts to get the engine running again have not had the desired effect. Now Beijing is resorting to more far-reaching measures.
China’s central bank has announced far-reaching economic stimulus measures due to the weakening economy in the People’s Republic. This will reduce interest rates on existing real estate loans, as the authority’s governor, Pan Gongsheng, said in Beijing. In addition, the minimum down payment for a second housing loan will be reduced from 25 percent to 15 percent.
Banks will also have to hold less cash than before. The minimum rate for this will be reduced by 0.5 percentage points, said Pan. This will provide the financial market with around one trillion yuan (approximately 125.5 billion euros) in additional liquidity.
Measures for economic growth
The central bank is responsible for currency and monetary policy in China. Its measures are intended to support stable economic growth in the world’s second-largest economy, as the state-run People’s Daily wrote. The central bank is now acting as there are increasing assumptions that China could miss its targeted growth target of around five percent.
In the People’s Republic, a real estate crisis has been weighing on economic performance for some time. An announced program for the state to buy back vacant apartments has so far had little effect. The crisis in the sector, which has long been an important growth driver, is also contributing to weak consumer behavior in China. Many people have invested their savings in real estate for a long time and have had to fear a loss in value for some time. Households are therefore holding on to their money for uncertain times instead of spending it.
Source: Stern
