China cuts banks ‘ cash reserves

The Chinese central bank today cut the percentage of cash reserves held by operating banks, in an attempt to”strengthen the foundation” of economic recovery in a faltering country.
The world’s second largest economy is struggling to recover after it abandoned its isolation late last year in the face of the covid-19 pandemic, especially in light of falling external demand and domestic consumption, which exacerbated the crisis of the vital real estate sector despite its slowdown.
The crisis in the real estate sector, which has long accounted for a quarter of China’s gross domestic product, is a major obstacle to economic recovery, while major real estate developers are facing a difficult financial situation. China is also experiencing difficulties in the export sector, which is traditionally a pillar of growth in this country, according to the”French”.
The government has so far preferred to take a series of measures to boost growth rather than adopt large-scale stimulus packages.The people’s Bank of China said it would cut the mandatory Reserve rate for banks “RRR” by 0.25 per cent to 7.4 per cent from tomorrow.
Beijing cut this rate earlier in March, and this reduction represents the latest episode in the series of major rate cuts in a few weeks.
The people’s Bank of China made an exception to this decision for banks applying a mandatory Reserve rate of 5%.The bank explained that the aim of this policy is “to strengthen the foundations of economic recovery and maintain reasonable and sufficient liquidity”.
“At present, China’s economic processes are maintaining their recovery,” the central bank said.. Social expectations continue to improve”.”We will implement a prudent monetary policy accurately and efficiently .. We are pushing the economy to achieve effective qualitative improvement and reasonable quantitative growth,”he said.
China is expected to announce a set of key economic indicators tomorrow, with analysts expecting them to show a slight improvement compared to previous months.Factory activity in China fell for the fifth month in a row in August, but increased compared to July, according to official statistics.
The Chinese government is targeting a growth rate of 5 percent this year, reflecting the poor economic performance for the first time in decades except during the pandemic.For its part, the IMF expects growth of 5.2 percent of China’s GDP this year.