China pumps the largest liquidity since 2016 to support the economy

China’s central bank has injected the largest amount of liquidity since 2016 as a one-year loan as it seeks to support an economy plagued by declining real estate and weak demand.

The People’s Bank of China provided commercial lenders with 1.45 trillion yuan ($204 billion) through medium-term lending facilities, about 800 billion yuan more than the amount due in December.

Net cash was more than double the amount expected by analysts surveyed by Bloomberg and was also greater than the volume of liquidity pumped into the banking system last month.

“The volume of liquidity that has been pumped in is much greater than expected, so this indicates the continuation of facilitative monetary policy,” Becky Liu, Head of China’s Macro Strategy at Standard Chartered Bank, said.

“This means that China will not reduce the reserve to meet bank requirements anytime soon,” she added.

The continued funding support underscores Beijing’s difficult task of selling an additional 1 trillion yuan in the fourth quarter to finance stimulus.