China’s central bank unleashed RMB 570 billion ($84 billion) into the country’s banking system in a further effort to stimulate lending and bolster liquidity, the Financial Times reports.
Whilst Chinese banks extended record new loans in 2018, credit and money-supply data this week showed that lending is still weaker than hoped for following the government’s credit crackdown earlier in the year.
The funds will be deployed via two routes: RMB 350 billion in seven-day reverse bond repurchase agreements; and RMB 220 billion in 28-day reverse repos. Analysts see this move as a more temporary solution to high cash demand during the gift-giving Spring Festival holiday, compared with lasting reserve rate cuts seen earlier this month.
“Beijing is becoming increasingly worried as the growth slowdown rapidly worsens. The PBoC has ramped up its monetary easing,” said Ting Lu, chief China economist at Nomura in Hong Kong. “Chinese banks are also under pressure to ramp up lending to support Beijing’s call to support growth.”
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