China yesterday unveiled some of its boldest measures in years aimed at boosting its struggling economy as leaders grapple with a prolonged property-sector debt crisis, continued deflationary pressure and high unemployment among young people.
People’s Bank of China Vice Governor Pan Gongsheng (潘功勝) told a news conference in Beijing that the central bank would cut a slew of rates to boost growth, including a cut of 0.5 percentage points to the reserve requirement ratio in the near future, which dictates the amount of cash banks must hold in reserve.
The move would inject about 1 trillion yuan (US$141.7 billion) in “long-term liquidity” into the financial market, Pan said.
Photo: AFP
The central bank would also “lower the interest rates of existing mortgage loans,” he added.
The decision would benefit 150 million people across the country and lower “the average annual household interest bill by about 150 billion yuan,” Pan said.
Minimum down payments for first and second homes would be “unified,” with the latter reduced to 15 percent from 25, he said.
In addition, Beijing will create a “swap program,” allowing firms to acquire liquidity from the central bank, Pan said, a move he said would “significantly enhance” their ability to buy stocks.
“The initial scale of the swap program will be set at 500 billion yuan, with possible expansions in the future,” he said.
Shares in Hong Kong and Shanghai surged about 4 percent yesterday after the central bank’s announcement.
However, Moody’s Analytics economist Heron Lim (林師順) said that the move was expected given gloomy economic data in the past few months suggesting Beijing could miss its GDP growth target of 5 percent this year.
“But this is hardly a bazooka stimulus,” Lim told reporters. “Far more monetary easing and a stronger government stimulus is also desirable to finish bailing out the real-estate market and inject more confidence into the economy.”
At a minimum, “broader direct household support in helping them consume more goods will be useful, which is currently just too narrowly designed for industrial goods,” he said.
Another analyst said that the “measures are a step in the right direction.”
“We continue to believe that there is still room for further easing in the months ahead,” ING Bank NV chief economist for greater China Lynn Song (宋林) said.
Beijing has unveiled a number of measures aimed at boosting the property sector, including cutting the minimum down-payment rate for first-time homebuyers and suggesting that the government could buy up commercial real estate.
However, those failed to boost confidence and housing prices have continued to slide.
Adding further strain, local authorities in China face a ballooning debt burden of US$5.6 trillion, according to the central government, raising worries about wider economic stability.
Speaking alongside Pan, Chinese National Administration of Financial Regulation Director Li Yunze (李雲澤) said that Beijing would “cooperate in resolving real-estate and local government debt risks.”
“China’s financial industry, especially large financial institutions, is operating stably and risks are controllable,” Li said. “We will firmly maintain the bottom line of preventing systemic financial risks.”
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his