In a meeting with 24 financial institutions, the People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBIRC) urged lenders to “go all out to stabilize the fundamentals of the economy,” the PBOC said in a statement Tuesday.
“Major financial institutions need to shoulder their responsibilities, make use of all resources to effectively connect with credit demand and strengthen policy transmission,” according to a statement quoting the meeting, Bloomberg reported.
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The statement also indicated that banks should target smaller companies, green projects, technology, energy and infrastructure.
In April, loan growth in China took a dive to its lowest point in close to five years as borrowing took a backseat to COVID lockdowns. The PBOC reduced the minimum mortgage rate for first-time homebuyers and lenders reduced the key reference rate for mortgages last week, per the report.
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“The statement seems to be a guidance to encourage commercial banks to increase credit support to the real economy,” Peiqian Liu, an economist at NatWest Group Plc, told Bloomberg.
“It was not a new policy initiative but reinforced our view that the monetary easing now focuses more on quantity-based policy easing. Credit impulse will likely rebound further to support the post-lockdown recovery,” Liu said.
To help spur the economy, Beijing is also committing to cut annual taxes by more than 140 billion yuan ($21 billion) to 2.64 trillion yuan, increase infrastructure spending and postpone social security payments of 320 billion yuan until the end of this year, Aljareeza reported.
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