As expected, China announced a broad swathe of stimulus measures on Tuesday, during a rare public briefing by the country’s top economic bigwigs, the South China Morning Post reported.
People’s Bank of China (PBOC) governor Pan Gongsheng announced cuts to the mortgage rate for existing housing and to the reserve requirement ratio (RRR), which is the amount of cash commercial banks need to hold as reserves. Both would initially be reduced by 0.5 percentage points, though Pan signalled that further cuts to the RRR could come before the year’s end.
The governor also said the government would introduce new tools to support the stock market and ease the financial pressures crippling real estate developers. He noted that additional policy support would follow if deemed necessary.
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A half a percentage point reduction in mortgage interest rates should help 50 million households (or 150 million people) reduce their household interest expenses by an average of about 150 billion yuan per year – which would, in turn, boost consumption and investment, according to Pan.
The new suite of stimulus measures appeared to have been prompted by the mainland’s poor economic performance in August, sparking concerns that China could miss its 2024 target of around five percent growth. “The Chinese economy is recovering and the monetary policies introduced by our bank this time will help support the real economy, incentivise spending and investment and also provide a stable footing for the exchange rate,” the Financial Times reported Pan as saying.
Pan was joined by the minister for the National Financial Regulatory Administration, Li Yunze, and the chairman of the China Securities Regulatory Commission, Wu Qing, at yesterday’s briefing.
