Financial markets and foreign observers have been anticipating some form of Chinese stimulus plan for much of 2024, reflecting the prolonged weakness in the country’s domestic demand and the history of such policy responses – such as those in response to the Global Financial Crisis and the downturn in 2015. In late September, the People’s Bank of China announced a range of measures to provide additional support, however in the current environment these monetary measures, on their own, are unlikely to be enough to stimulate domestic growth.

Monetary measures at a glance

The measures announced by the People’s Bank of China (PBoC) can be grouped into broad monetary easing and policies targeted at the property and equity markets.
In the case of the former, these measures consist of a 50 basis point cut to the Reserve Requirement Ratio (RRR) – the share of deposits that commercial banks are required to hold at the central bank. It is estimated that this should free up around RMB 1 trillion for additional lending. The PBoC also indicated that further cuts to the RRR, in the range of 25 to 50 basis points, could be made this year, depending on conditions in the market at the time.

Read the full report here: China Economic Update September 2024