By South China Morning Post | Created at 2024-09-25 04:03:00 | Updated at 2024-09-30 13:20:55
5 days ago
By announcing a slew of bombshell measures to support the economy, Beijing is inching towards a strategic shift in macro policy amid fears of an economic free fall, according to analysts.
The announcements represented a change from policymakers’ previous approach of drip-feeding piecemeal support measures to a coordinated package of stimulus measures, the analysts added.
“We can no longer ‘squeeze out the toothpaste’,” said Zhu Tian, an economics professor with the China Europe International Business School in Shanghai, referring to the previous reluctance of Chinese policymakers to unleash large-scale stimulus.
“China’s economy is now in a serious drought situation. If we don’t release water, we will die of thirst.”
The policy changes, announced by People’s Bank of China governor Pan Gongsheng on Tuesday, included cutting the benchmark policy rate by 0.2 of a percentage point and the reserve requirement ratio by half of a percentage point; reducing the outstanding mortgage rate by half a percentage point and the down-payment ratio for second-time homebuyers from 25 to 15 per cent; and specific policies to provide liquidity to equity markets.
