China Introduces Major Economic Stimulus Measures to Revitalize Growth

China’s central bank has announced a significant package of measures aimed at revitalizing the country’s sluggish economy. People’s Bank of China (PBOC) Governor Pan Gongsheng revealed plans to lower borrowing costs and empower banks to expand their lending capabilities.

This announcement comes in response to disappointing economic data, raising concerns that the world’s second-largest economy may fall short of its 5% growth target for the year. Following Mr. Pan’s remarks, Asian stock markets saw a notable increase, with major indexes in Shanghai and Hong Kong rising over 3%.

At a rare news conference attended by officials from two other financial regulatory bodies, Mr. Pan disclosed that the central bank would reduce the reserve requirement ratios (RRR) for banks by half a percentage point. This change is expected to release approximately 1 trillion yuan (around $142 billion) into the economy, with potential for further reductions later this year.

To address the challenges facing China’s struggling property sector, additional measures will include lowering interest rates on existing mortgages and reducing the minimum down payment for all home types to 15%. The real estate market has faced a sharp downturn since 2021, leading to the collapse of several developers and leaving many homes unsold and projects unfinished.

These stimulus initiatives from the PBOC come just days after the US Federal Reserve made its first interest rate cut in over four years, signaling a shift in monetary policy in response to global economic challenges.