China releases $70 billion to banks to prop up an economy in slowdown

The People’s Bank of China said it will cut back for the second time questamount of money that banks have to keep in reserve, freeing up money.
About 500 billion yuan ($69.8 billion) of long-term liquidity to support the economy in difficulty affected by a number record of COVID-19 infections.

And China’s central bank announced on Friday that it will reduce the reserve requirement ratio for banks by 25 basis points, effective December 5.

The central bank hopes to stimulate more lending into the economy, but analysts doubt the possibility of quick results, in how much the emergence of new outbreaks of “Covid” has led to the closure of factories and the imposition of isolation on families, with a decrease in the desire to obtain new credit, while expectations relating to an already slower-than-expected growth they are darker.

“The downgrade will help banks implement a directive to defer loan repayments by companies grappling with widening lockdown restrictions,” he said. in notes Mark Williams, chief economist for Asia at Capital Economics.

“But few companies or families are willing to commit in new loans in this uncertain environment,” Williams added.

The world’s second-largest economy has experienced a broad slowdown in October. The recent surge in COVID cases heightened concerns about growth in the fourth quarter of 2022. The economy was already under pressure from a sluggish housing market and weak global demand for Chinese goods.

The economy grew by just 3% in the first three quarters of questyear, well below the annual target of around 5.5%. Analysts widely expect the country to grow for the full year at just over 3%.