China Injects $112 Billion of Cash to Revive Economic Growth

  • China’s central bank injected the most cash via one-year policy loans since 2016, as it seeks to support an economy suffering from a housing slump and weak demand.
  • The People’s Bank of China offered commercial lenders 1.45 trillion yuan ($204 billion) via its medium-term lending facility — 800 billion yuan more than the amount coming due in December.
  • “MLF injection is much larger than expected, so it suggests continued easy monetary policy,” said Becky Liu, head of China macro strategy at Standard Chartered. This means China won’t cut the reserve-requirement ratio for banks anytime soon, she added.
  • The continuation of funding support underscores Beijing’s difficult task of selling an additional 1 trillion yuan in the last quarter of the year to finance stimulus.
  • The rate on the one-year loans was kept unchanged at 2.5%.
  • Both manufacturing and services activities shrank in November.
  • With rebounding from the zero COVID policy being weaker than expected, alongside the deepening property crisis, the rhetoric of more government action is needed to support a faltering recovery.

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