The Minister of Finance of China announced that the country has 2.3 trillion yuan (about 325 billion dollars) available in special bonuses to use for the next three months, in an attempt to boost the economy in crisis.
“In the next three months, a total of 2.3 trillion yuan in special bond funds can be made available for use in various places,” Finance Minister Lan Fo’an said at a news conference in Beijing.
The highly anticipated stimulus was added to a series of measures announced in recent weeks, such as cutting interest rates, and aims to strengthen banks, shore up the real estate market and free up consumer spending.
It is Beijing’s largest aid program since the global financial crisis.
Despite the scale of the package, Minister Lan said China could go further.
“Currently, we are accelerating the use of additional treasury bonds, and special ultra-long-term treasury bonds are also being issued for use,” he said.
Beijing plans to “issue special government bonds” to “improve the risk resistance and lending capabilities” of state-owned commercial banks “to better serve the development of the real economy,” Lan explained.
The debt ceiling for local governments will also be lowered so they can invest in more infrastructure and help protect jobs.
Beijing has said it aims to grow 5% percent this yeara number that any Western country would like, but that is very far from the double-digit expansion that the Chinese economy sustained for years.
While stimulus measures to alleviate economic uncertainty include cutting rates and easing home purchases, economists say more than that is needed for China to emerge from recession for good.
On Saturday, major Chinese banks announced they would lower interest rates on existing mortgages starting Oct. 25, according to state media.
With some exceptions such as second mortgages, “interest rates on other eligible mortgages will be adjusted” to no less than 30 basis points below the central bank’s reference interest rate, state broadcaster CCTV reported.
The banks announced that the adjustments “will be made uniformly… and customers will not have to request them,” CCTV added.
This week, China’s central bank increased support for markets by releasing tens of billions of dollars in liquidity for companies to buy shares.
Beijing said the 500 billion yuan (about $70 billion) swap mechanism would promote “the healthy and stable development of the capital market.”
Source: Ambito
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