China announced on Saturday that it would issue special bonds to support its struggling economy, raising $325 billion that will be used over the next three months to strengthen the real estate market, reduce local debt and strengthen banks. announced that it could be done.
The move was announced at a long-awaited press conference by Finance Minister Lan Foin and other officials, and comes in addition to a series of measures announced in the past few weeks, including interest rate cuts and more liquidity for banks.
China’s economy has been hit by a years-long real estate sector crisis and chronically weak consumption. Officials hope to reverse the economic slowdown and hit a 5% growth target this year, which would be the envy of many Western countries but far from the double-digit growth that has propelled China for years. .
Lan said on Saturday that the Chinese government is “accelerating the use of additional government bonds, and super-long-term special bonds are also being issued for use.”
“Over the next three months, special bond funds totaling 2.3 trillion yuan may be arranged to be used in various places,” he added.
Lan also said the Chinese government plans to “issue special bonds to support large state-owned commercial banks,” but did not specify the amount.
It would also raise the debt ceiling for local governments, allowing them to spend more on infrastructure and protect jobs.
Liao Min, vice minister of finance, said the measures would “help ease liquidity and debt pressure on local governments and real estate companies.”
Analysts expressed frustration that the Chinese government has refrained from giving numbers on further fiscal stimulus.
“The key message is that…the central government has the ability to increase the budget deficit by issuing more bonds, and…the central government plans to issue more bonds to help local governments repay their debts. “President Zhang Zhiwei said. said Chief Economist at Pinpoint Asset Management.
Heron Lim of Moody’s Analytics told AFP that Beijing was likely “still working out the details of its fiscal stimulus”.
– Help with mortgage loans –
Uncertainty in China’s economy is also fueling a vicious cycle that keeps consumption stubbornly low.
Chinese policymakers have announced a series of stimulus measures, including a series of interest rate cuts and loosening restrictions on home purchases, but economists say more steps are needed to permanently lift the economy out of doldrums. There is.
At the request of the government, major Chinese banks announced early Saturday that they would lower existing mortgage interest rates starting October 25, according to state media.
The state broadcaster said, “Except for second mortgages in Beijing, Shanghai, Shenzhen and some other regions, the interest rate for other eligible mortgages is at least 30 basis points above the prime lending rate, which is the People’s Bank of China’s mortgage reference rate. It will be adjusted so that it does not fall below the points.” CCTV reported.
CCTV reported that major banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank, announced that the adjustments would be made “all at once.”
The banks said the adjustment would be “uniform and customers do not need to apply,” CCTV reported.
Last month, the People’s Bank of China asked commercial banks to lower these rates by October 31.
Last month, the Chinese government lowered interest rates on one-year loans to financial institutions, reducing the amount of cash they must hold on hand and pushing for lower interest rates on existing mortgages.
And the central bank this week stepped up its support for markets by releasing tens of billions of dollars of liquidity for companies to buy stocks.
Balm Juuoho/Pond
