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China prepares to roll out more measures to bolster economy

Chinese policymakers are reportedly preparing measures for backing up the country’s economy following the coronavirus outbreak, which is expected to negatively impact the first-quarter growth.

The government is debating whether to lower the planned 2020 economic growth target of around six percent, policy sources told Reuters.

They said that China’s central bank is likely to lower its key lending rate on February 20, and cut banks’ reserve requirement ratios (RRRs) in the coming weeks.

“Currently, monetary policy is being loosened, but the central bank will follow a step-by-step approach and watch the virus situation,” one of the sources said.

China Development Bank reportedly plans to issue up to 14.25 billion yuan ($2.04 billion) of one-year special bonds on Thursday to raise funds to help tackle the epidemic.

This week, the People’s Bank of China (PBOC) pumped $173 billion into the financial system in an attempt to restore investor confidence. In the past two days, the PBOC has injected 1.7 trillion yuan ($243 billion) through open market operations.

According to people familiar with the matter, the authorities plan more spending, tax relief and subsidies for virus-hit sectors, as well as further monetary easing to spur bank lending and lower borrowing costs for businesses.

“We have policy reserves and will step up policy support for the economy. The most urgent task is to put the virus outbreak under control,” said an unnamed source.

At least 427 deaths and over 20,000 cases of coronavirus infection have been confirmed in China.