The central bank announced in a statement that it cut the interest rate on medium-term loans to financial institutions from 2.3 percent to 2 percent, the lowest level ever. The last cut dates back to July.
The reduction was accompanied by an injection of 300 billion yuan (38 billion euros) into the economy, according to the central bank, at a time when the country is short of liquidity.
This support was positively reflected on the Chinese stock exchanges on Wednesday morning.
“China’s interest rate cuts are no longer enough to stimulate growth,” analyst Shahzad Qazi of consultancy China Big Book told AFP.
“Beijing needs a more robust recovery plan,” he said, as the country grapples in particular with a property crisis, high youth unemployment, slowing household consumption and the threat of recession.
More than a year and a half after the lifting of health restrictions imposed by the authorities to combat the Covid pandemic, which had disastrous repercussions on the country’s economy, the pace of economic recovery is still slower than expected.
On Tuesday, China’s central bank announced unprecedented measures since the lifting of Covid-related restrictions to support consumption and real estate, hoping to stimulate activity that is going through a difficult phase.
The housing and construction sector has been suffering since 2020 from strict conditions imposed by Beijing on real estate developers to obtain loans, which has pushed some, such as Evergrande or Country Garden, to the brink of bankruptcy, while low prices prevent Chinese from investing in the sector.
The Chinese authorities are seeking to achieve GDP growth of about 5 percent in 2024, a goal that many economists consider very difficult to achieve due to current challenges.
China is due to release third-quarter growth figures in mid-October.
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