China’s recent unveiling of a series of stimulus measures aimed at bolstering economic growth and stabilizing the property market has been met with widespread approval from experts and analysts. The measures, announced on Tuesday, include cutting the amount of cash banks are required to hold in reserve and implementing policy adjustments to invigorate the economy.
Analysts indicate that these initiatives are significant and reflect the Chinese government’s determination to support economic stability. According to a research report by the Chinese think tank CF40 (China Finance 40 Forum), the People’s Bank of China’s (PBOC) moves demonstrate a clear intention to stabilize economic growth, the stock market, and the real estate sector.
The CF40 report anticipates a decline in overall interest rates, highlighting that interest rate reductions are more effective in supporting economic stability compared to lowering reserve requirement ratios. The report further notes that the PBOC’s decision to reduce mortgage rates for existing loans could directly enhance household cash flow and stabilize outstanding household credit.
Lynn Song, chief economist for Greater China at ING, told CNBC that the series of measures represents a “step in the right direction.” She emphasized the significance of announcing multiple measures simultaneously, rather than implementing individual piecemeal actions with limited effect. “This coordinated approach signals a strong commitment to addressing economic challenges,” Song stated.
Eswar Prasad, an economics professor at Cornell University, echoed these sentiments in an interview with the Financial Times. He described the actions as “quantitatively modest but symbolically significant,” suggesting that they signal the government’s willingness to utilize macroeconomic stimulus to support faltering economic activity.
Many experts believe that the PBOC’s actions have exceeded expectations and will boost market confidence in the short term. There is also an expectation of further monetary policy easing in the months ahead, especially as global central banks are moving towards a rate-cut trajectory.
Reference(s):
cgtn.com
