China Unveils Major Stimulus Package to Boost Slowing Economy

China's central bank, the People’s Bank of China (PBOC), has unveiled a comprehensive package of economic measures to revive the country’s slowing economy. Governor Pan Gongsheng announced significant steps, including lowering borrowing costs and allowing banks to increase their lending. This intervention follows months of disappointing economic data, raising concerns that China might miss its 5% growth target this year. Stock markets across Asia responded positively, with significant gains after the announcement. Among the key measures is a reduction in the reserve requirement ratio (RRR), which will initially be cut by 0.5%, freeing up approximately 1 trillion yuan ($142bn; £106bn) for lending. This move aims to stimulate more lending in the economy, with Mr. Pan signaling that further cuts could follow later in the year.

In addition to the RRR cut, the PBOC is targeting China's struggling real estate market. It plans to reduce interest rates on existing mortgages and lower minimum down payments for all types of homes to 15%. This comes as the property sector, which has faced a sharp downturn since 2021, continues to struggle with unfinished projects and unsold homes after several developers collapsed. The stimulus package arrives as China's real estate crisis deepens, mirroring global economic adjustments. Days earlier, the US Federal Reserve cut interest rates for the first time in four years, signaling a shift in global monetary policies.

With China’s economy at risk of falling short of its growth goals, these latest measures represent a crucial step in efforts to reignite the economic engine of the world’s second-largest economy. Markets in Shanghai and Hong Kong showed optimism, with major indexes rising over 3% in the wake of the announcement. ⚡ ImageCredit: GettyImages