China announces sweeping measures to ease policy in bid to shore up trade-war hit economy
BEIJING, CHINA – MARCH 06: Pan Gongsheng, governor of the People’s Bank of China, attends a new conference on economy for the third session of the 14th National People’s Congress (NPC) on March 6, 2025 in Beijing, China.
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China’s central bank and financial regulators announced comprehensive policy measures on Wednesday, including interest rate cuts, in an effort to boost economic growth amidst escalating trade concerns.
The People’s Bank of China Governor, Pan Gongsheng, revealed that China will reduce the seven-day reverse repurchase rates by 10 basis points to 1.4%, and lower the reserve requirement ratio by 50 basis points, releasing 1 trillion yuan ($138.5 billion) into the market.
Other measures include support for key sectors such as technology and real estate, as well as the establishment of a 500-billion-yuan relending tool for consumption and elderly care. The central bank will also reduce mortgage rates and ease cash reserve requirements for auto financing firms.
Despite these efforts, some economists believe that the impact on domestic credit demand may be limited, as borrowing behavior has shown insensitivity to interest rates.
More measures to support small and medium enterprises and the private sector are expected to be announced soon by the Chinese government.
The officials’ swift actions indicate a sense of urgency to stimulate the economy, with analysts noting that the easing depreciation pressure on the Chinese yuan has created favorable conditions for monetary easing.
While fiscal policy measures are currently absent, they may be implemented if signs of economic deterioration become more apparent.
