Supporting the economy will strengthen its growth
The Central Bank of China has decided to reduce the size of real lending rates. In addition, the regulator intends to reduce the cost of financing for businesses. Thus, the central bank wants to reduce the losses faced by market participants due to the slowdown in economic growth.
At the same time, the regulator notes the positive dynamics, which have been observed in the country since May. However, it is not enough to stabilize the situation, so the bank introduces new measures to stimulate the market.
Despite the fact that the Chinese economy has improved in the second half of the year, it is too early to talk about stability. In addition, apart from domestic factors, the market is under significant pressure from global factors, and it is not yet possible to minimize their impact.
A slowdown in economic growth in China is recorded in spring. The country has strict measures in place to prevent COVID-19 outbreaks. However, the pandemic cannot be fully managed, and periodic lockdowns are imposed in different regions of China. This had a negative impact on the economy, and for a certain period of time, it was almost paralyzed.The regulator is taking active measures to stimulate the market, but experts doubt that such steps will achieve the previously set goal of GDP growth. Earlier, the government set a goal to increase the target by the end of this year by 5.5%.
It should be noted that the Chinese economy depends on processes in other countries. For example, it is affected by the tightening of market regulation measures introduced by the U.S. Federal Reserve and the Central Bank of the European Union. Although the Chinese regulator believes that the monetary policy of other major economies is not determinant for the market, it plays an important role in changing the dynamics.
In order to improve the situation, China’s central bank is developing comprehensive measures that will create a favorable financial environment for the speedy recovery of the pace of development.
One of the issues that directly affect the country’s economy is the control of the technology sector. The central bank intends to continue to control the financial activities of local companies, but not as strictly as in recent years. The government’s past policies toward the IT segment resulted in the industry losing trillions of dollars in market value. However, after the Central Bank announced the revision of regulations, the share price of technology companies on the Hong Kong stock exchange went up. For example, the price of Alibaba securities rose by almost 16% and Tencent by 11%. In addition, the central bank intends to allocate funds for financial support of the technology sector to strengthen its stability and increase the share of revenues in the Chinese economy.