Four major Chinese banks have announced interest rate cuts. You are following an order from the central bank.
Four of China’s largest state-owned banks announced Saturday that they will cut their mortgage rates starting October 25. The Chinese government authorities are increasing their efforts to stimulate the world’s second largest economy. The lenders, including China Construction Bank Corp and Bank of China, said they will cut their interest rates by up to 30 basis points below the benchmark lending rate.
China’s central bank ordered the interest rate cuts in late September to ease the mortgage burden on homeowners and boost the real estate market and weak domestic demand.
Chinese Finance Minister Lan Foan announced a package of measures to stimulate the economy on Saturday. Among other things, the issue of government bonds is to be increased “significantly” in order to support people with low incomes, get the real estate market going again and replenish the capital of state-owned banks.
Finance Minister Lan Foan said this at a press conference, without giving any specific figures. The Chinese government has sufficient scope for issuing government debt. There will also be more “counter-cyclical measures” this year.
In global financial markets, possible fiscal stimulus measures in China have been the subject of intense speculation since September. At that time, the Politburo, the top leadership of the Communist Party, signaled urgency after a meeting in view of increasing economic headwinds in China.
Chinese stocks then hit two-year highs and rose 25 percent within days of the meeting. Afterwards, they calmed down again as further details about the government’s additional spending plans were not known.