China economy: China cuts reserve requirement ratio to boost economy

China cut the amount of cash banks must keep in reserve at the central bank in an effort to support lending and strengthen the economy’s recovery from pandemic restrictions and a property market slump.

, with unemployment still elevated, property investment continuing to contract and falling exports dragging on industrial output.“It seems that the central bank is not going to slow the pace of credit growth as people feared,” said Xing Zhaopeng, senior China strategist at Australia and New Zealand Banking Group Ltd.

The PBOC said the cut in the reserve ratio was aimed at maintaining “reasonable and sufficient liquidity” and ensuring that money supply increases in line with nominal economic growth. The central bank added it won’t engage in “flood irrigation,” a term it uses to refer to large stimulus.

Why, are their printing presses not working?

A possible way to increase bank profits - if the additional funds for lending don't end up down ratholes, requiring loan write-offs - and the Bank of China is always willing to step up to the plate to ensure depositors funds are effectively guaranteed against loss.

'strengthen' is probably the wrong word here

Recipe for disaster, considering banks in China are already struggling and have refused their clients access to funds.

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