China cut reverse requirement | 9th Dec
China's central bank said on Monday (Dec 6) it would cut the amount of cash that banks must hold in reserve, its second such move this year, releasing 1.2 trillion yuan (US$188 billion) in long-term liquidity to bolster slowing economic growth. The People's Bank of China (PBOC) said on its website it would cut the reserve requirement ratio (RRR) for banks by 50 basis points, effective from Dec 15.
The world's second-largest economy, which staged an impressive rebound from last year's pandemic slump, has lost momentum in recent months as it grapples with a slowing manufacturing sector, debt problems in the property market and persistent COVID-19 outbreaks. Some analysts believe growth could slow further in the fourth quarter from the third quarter's 4.9 per cent, although the full-year growth could still be around 8 per cent.
China will focus on stabilizing macroeconomic conditions, ensuring the economy grows in a reasonable range and that society remains orderly ahead of the party’s key 20th congress meeting later next year. The reduction will lower the capital cost for financial institutions by about 15 billion yuan each year, which will lower the overall financing cost of the economy.
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