The People’s Bank of China said that it would lower the quantity of money that banks are mandated to set aside, as it looks to boost a slowing economy that has been hampered by a slump in the property market, reports The Wall Street Journal. The effort to inject liquidity into the financial system shows Beijing’s increasing concerns around the growth outlook for the world’s second-largest economy. The move comes as the government has taken a flurry of measures to avoid a downward spiral in the housing market and stabilize heavily indebted developers such as China Evergrande Group.
On Monday, the country’s central bank said it would reduce the reserve requirement ratio for banks by 0.5% to 8.4%, starting December 15, which would unleash about $188.3 billion, into the financial system. It was the second such move this year after an earlier one in July.
A downturn in the property sector is the biggest of several headwinds buffeting China’s economy, including an energy-supply crunch and subdued consumption caused by some of the world’s toughest Covid-19 policies.