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China lowers bank reserve requirement as stimulus to slowing economy


China’s central bank announced on Friday that it had announced a reduction in the amount of cash banks must hold in reserve for the first time this year to support an economy weakened by the pandemic.

The People’s Bank of China (PBOC) said it would cut reserve requirements by 0.25 percentage points from March 27, allowing commercial banks to lend more to businesses.

This brings the weighted average ratio for financial institutions to approximately 7.6 percent.

The PBOC said the latest cut was intended to “improve the level of service to the real economy”.

The rate was last cut in November, when the world’s second-largest economy was hit hard by strict Covid-19 restrictions.

China is still grappling with the fallout from its zero-Covid policy, which has included harsh lockdowns and massive business closures, impacting supply chains and employment.

The country has set an economic growth target of “around five percent” for 2023, one of the lowest in decades.

Authorities reported a rebound in retail sales in January and February, after the country abandoned zero-Covid controls and a massive exit wave of infections quickly subsided.

But Premier Li Qiang has warned that meeting the growth target was “not easy” as the real estate crisis continued and global demand slowed.


Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.