BEIJING: China on Friday (Sep 27) cut the amount banks must hold in reserve, a bid to boost its flagging economy by releasing an estimated US$142.6 billion in liquidity into the financial market.
The move, announced by China’s central bank, comes a day after top officials including President Xi Jinping met and admitted to “new problems” in the world’s second-largest economy.
Beijing has this week unveiled a raft of measures to boost its ailing economy, which it has targeted to grow 5 per cent this year – an objective analysts say is optimistic given the many headwinds it faces.
On Thursday, the ruling Communist Party convened a meeting of its top body, the Politburo, to “analyse and study the current economic situation”.
Beijing on Friday also cut the seven-day reverse repo rate, the short-term interest paid by the central bank on loans from commercial lenders.
The central bank announced it cut the key rate from 1.7 per cent to 1.5 per cent.
Growth in China is being dragged down by a prolonged debt crisis in the property sector, sluggish domestic consumption and high youth unemployment.
“Some new situations and problems have emerged in the current running of the economy,” the Xinhua news agency reported after Thursday’s Politburo meeting.
“We must view the current economic situation comprehensively, objectively and calmly, face difficulties squarely, (and) strengthen confidence,” it added.
Politburo members also agreed on the need to “further improve the focus and effectiveness of policy measures” aimed at lifting the economy.
