Interest Rates Cut in China to Boost Economic Recovery

Interest Rates Cut in China to Boost Economic Recovery

The People’s Bank of China reduced the main rate at which it provides short-term liquidity to banks, from 2.1% to 2% on August 15, 2022.

The central bank also cut the rate of its one-year lending facility from 2.85% to 2.75% in order to “maintain reasonable and sufficient liquidity in the banking system.”

“The combination of zero-Covid strategy and the deteriorating property sector continues to drag down the economy, even as export growth remains elevated and the automobile sector gets a boost from the purchase tax cut.”

China’s borders remain closed to visitors and even residents returning home have to complete up to 10 days in quarantine before being allowed to enter the wider community.

The world’s second-biggest economy saw a bounce in business activity as some coronavirus restrictions eased in June, but the boost is fading and Beijing remains welded to a zero-Covid policy of snap lockdowns and long quarantines, which has battered sentiment.

For July, China’s industrial production rose 3.8 per cent year-on-year, down from a 3.9 per cent jump in June, the National Bureau of Statistics (NBS) said.

The country’s economic growth was just 0.4 per cent year-on-year in the second quarter — its slowest rate since the initial Covid outbreak. The cut in rates is hoped to give the manufacturing sector confidence to maintain its production levels.

International buyers are anxious to return to China. They have not been able to visit the RemaxWorld Expo0 in Zhuhai for the third year or visit the factories to renew contracts for products that are shipped across the globe

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