Pan Gongsheng, the governor of China’s central bank, announced a raft of measures on September 24 aimed at boosting the country’s flagging economy. The move, which came a week before the 75th anniversary of communist party rule, was made in response to concerns that China could miss its own 5% annual growth target.
The stimulus package included a 0.5 percentage point cut in the amount of cash reserves that commercial banks are required to have as deposits with the central bank. This should free up approximately 1 trillion yuan (£108 billion) for new lending. Pan said that the ratio could be cut by another 0.25 to 0.5 percentage points later in 2024.
The central bank has also made a 0.2 percentage point cut in the rate at which it lends money to commercial banks. Pan signalled that this could be followed by a 20–25 basis point cut in the rate that is charged to borrowers with the best credit rating.
