As global economic crisis deepens, China should ease credit terms – The UBJ
China’s explicit call for banks to reduce the amount of cash they keep as reserves and increase lending has boosted expectations of policy easing, but economists warn that any credit easing may not happen. not be enough to prevent a deep economic downturn.
Since the start of 2021, growth in the world’s second-largest economy has slowed as conventional economic drivers such as housing and consumption stall. The remaining major economic engine, exports, is now showing signs of exhaustion.
Recent major disruptions to inactivity caused by China’s biggest COVID-19 outbreak since 2020, along with strong lockdown measures, have tipped the scales in favor of a recession, some economists say.
Following a meeting on Wednesday, the Council of State, or cabinet, said monetary policy measures, such as cutting banks’ required reserve ratios (RRRs), should be implemented as soon as possible. .
The corresponding announcements of the easing were made two to three days after they were charged by the Council of State in the last two rounds of RRR cuts in 2021.
“In the coming days, we expect the PBOC to offer a 50 basis point RRR cut and possibly an interest rate cut,” Goldman Sachs said in a statement Thursday.
Most private analysts now forecast a 50 basis point reduction in the RRR, freeing up more than 1 trillion yuan ($157 billion) in long-term funds for banks to boost lending.
According to a statement from the state-run Securities Times, the date to watch is April 15.