The central bank of China reduced the proportion of reserves that banks must have in an attempt to reactivate the economy, the institution indicated on Wednesday.
The announcement by the People’s Bank of China boosted values in Chinese markets. The benchmark index in Hong Kong gained 3.6%.
Chinese markets have seen little movement in recent months as investors withdraw funds, discouraged by a faltering economy since the setbacks of the COVID-19 pandemic.
A series of sales this week was followed by unconfirmed reports that the government planned to have state investment companies redirect funds from outside the country to the markets and help offset losses. The bank’s moves appeared part of a broader effort to stabilize markets and convey more confidence about the future of the world’s second-largest economy.
Central bank Governor Pan Gongsheng said the deposit reserve requirement would be reduced by 0.5% from February 5. That would inject around one trillion yuan ($141 billion) into the economy, he added. The minimum required was 7.4% in December.
Speaking to reporters in Beijing, he added that the central bank would soon announce plans on lending to real estate developers to help support the sector.
The Chinese economy is recovering, he said, leaving room for policy changes.
“At this time, our country’s financial risks are generally controllable, the operations of financial institutions as a whole are sound, and financial markets operate without incident.”said Pan, in statements cited by the official China.com site.
Source: Gestion
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