Deepshikha Maan, Jadetimes Staff
D. Maan is a Jadetimes news reporter covering Asia
China Unveils Major Economic Stimulus Measures to Boost Growth
China's central bank has introduced a significant package of measures aimed at reviving the nation's slowing economy. Pan Gongsheng, the Governor of the People's Bank of China (PBOC), revealed plans to reduce borrowing costs and enable banks to expand their lending capacity.
The announcement follows months of disappointing economic data, raising concerns that China, the world’s second-largest economy, may fall short of its 5% growth target for the year.
Following the news, Asian stock markets surged, with major indexes in Shanghai and Hong Kong rising over 4%. During a rare press conference, Pan, along with officials from two other financial regulators, stated that the central bank would lower the reserve requirement ratio (RRR) – the amount of cash banks must keep in reserve. The initial reduction of 0.5 percentage points is expected to release around 1 trillion yuan ($142 billion; £106 billion) into the financial system. Pan also mentioned the possibility of another cut later in the year.
Additional measures to revitalize China's struggling property market include reducing interest rates for existing mortgages and lowering the minimum down payment for all types of homes to 15%. The real estate sector, which has been in decline since 2021, has faced challenges such as bankrupt developers, unsold properties, and unfinished projects.
These new stimulus efforts from the PBOC come shortly after the US Federal Reserve made a larger-than-expected interest rate cut, marking its first reduction in more than four years. The combined effect of these moves has led to a sharp rise in stock prices across key Asian markets.
