Beijing, (TDI): Chinese officials announced a comprehensive set of policy measures aimed at revitalizing the economy, enhancing the housing market, and supporting the stock market.
Key initiatives include cuts to the policy interest rate and the reserve requirement ratio (RRR), designed to foster a favorable monetary environment for stable growth and high-quality development.
Foreign media described these measures as “broader-than-expected,” reflecting the commitment of Chinese policymakers to ensure stable economic performance and bolster market confidence for the remainder of the year.
Economists anticipate that these robust policies will help China meet its annual growth target of approximately 5 percent for 2024, despite ongoing external pressures.
Following the policy announcements, Chinese stock markets saw significant gains, with the Shanghai Composite Index rising 4.15 percent—the largest single-day increase in over four years—while the Shenzhen Component Index climbed 4.36 percent.
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The measures were unveiled at a press conference by officials from the People’s Bank of China (PBC), the financial regulatory authority, and the securities regulator.
Among the notable changes, PBC Governor Pan Gongsheng revealed a 0.5 percentage point reduction in the RRR, which is expected to inject about 1 trillion yuan ($142 billion) into the financial markets.
Pan indicated that additional RRR cuts may occur later this year, depending on market liquidity conditions.
Interest Rate Cut
Furthermore, the PBC will reduce the interest rate for seven-day reverse repos from 1.7 percent to 1.5 percent and likely decrease medium-term lending facility rates by approximately 0.3 percentage points.
Long-term lending facility and deposit rates are also set to drop by 0.2 to 0.25 percentage points.
To support the housing market, the PBC announced an average reduction of 0.5 percentage points in mortgage rates for existing home loans and lowered the national minimum down payment requirement to 15 percent for second homes.
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Additionally, new monetary policy tools will be introduced to stabilize the stock market, with guidelines on attracting medium- and long-term funds to be released soon.
Pan reaffirmed the PBC’s commitment to an accommodative monetary policy stance, emphasizing the need for precise regulation to foster a conducive environment for sustained economic growth and development.
