Faced with a still gloomy economic situation, China’s central bank, the PBOC, announced on Saturday, June 27, she was going to cut rates interest, for the fourth time in eight months, while reducing reserve requirements for some banks.
From Sunday its lending rate will be lowered by one year 25 basis points and reduced to 4.85%, and the rate on one-year deposits will also be reduced by 25 basis points to 2%, said the institution on its website.
Simultaneously, the central bank will cut by 50 basis points the ratio of required reserves for some financial institutions: commercial banks serving rural areas, and providing loans to agriculture and small businesses. If these ratios will be reduced by 300 basis points for financial firms.
Growth at the lowest
Faced with intense slowdown of the second economy World, the central bank has increased since November flexibilities and liquidity injections, with mixed success. The indicators remain subdued and conditions continue to darken on dull domestic demand background, sharp decline of foreign trade and continued contraction in manufacturing.
The Chinese authorities willingly boast their efforts to rebalance China’s economic model – boosting consumption, promoting upgrading of industry and developing services – but remain eager to avoid any sudden deceleration of growth
The Chinese growth. should see a slowdown this year to stand at 7%, its lowest level in a quarter century, under the combined effects of a slowing housing sector, an industrial overproduction and the weight of debt. Chinese growth was 7.4% in 2014.
Fall of Shanghai and Shenzen Stock Exchanges
The ads of the Central Bank came a day of a spectacular plunge of Chinese stock exchanges, Shanghai fell by 7.4% while Shenzhen plummeted 7.87%.
The Chinese stock exchanges had swelled by some 50% last year, and rapid expansion continued in 2015: Shanghai climbed over 55% between early January and mid-June, recently exceeding 5,000 points for the first time in seven years. But since their highs there two weeks, the site has melted Shanghainese 18.8% and Shenzhen dropped 20.3%
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