China’s latest package of stimulus policies is anticipated to significantly boost consumption and provide financial relief for millions of families, according to experts speaking to China Media Group (CMG).
On Friday, the People’s Bank of China implemented a reduction in the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points. This move lowers the weighted average RRR for financial institutions to approximately 6.6 percent, effectively releasing about 1 trillion yuan ($142.6 billion) of long-term funds into the market.
At Thursday’s meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee, leaders made further arrangements for economic work. Key decisions included increasing counter-cyclical adjustments of fiscal and monetary policies, addressing public concerns about the property market, introducing methods to boost the capital market, and rolling out efforts to promote a private economy promotion law.
The government is adding more substance to its stimulus package. On Friday, the State Council Information Office held a routine policy briefing to introduce guidelines concerning the insurance sector. The guidelines outline objectives for the insurance industry for 2029 and 2035, emphasizing robust regulatory measures, risk management, and fostering the industry’s high-quality growth.
“We are focused on increasing investment in strategic emerging industries and advanced manufacturing sectors to better support the growth of high-quality new productive forces,” said Luo Yanjun, director of the Life Insurance Department of the National Financial Regulatory Administration.
Market analysts believe these measures will have a positive impact on the economy. “The cut in the RRR is equivalent to releasing about 1 trillion yuan of long-term funds to the market, greatly increasing market liquidity before the national holiday,” said Qu Yiping, an analyst at Eastmoney Securities.
Qu also highlighted the potential impact of the recent announcement on reducing interest rates for existing mortgages and unifying the minimum down payment ratio for mortgages. “The reduction is anticipated to cut the average annual interest expenses for households by roughly 150 billion yuan ($21.4 billion), which is a substantial boost to the revival of consumer spending among residents,” he added.
Reference(s):
cgtn.com
