China cuts reserve requirements
(2 December 2011 – China) Another 350 billion Yuan (A$53 billion) may be added to China’s financial system; after the country’s central bank reduced its reserve requirements for banks for the first time since 2008.
Reserve ratios will decline by 50 basis points effective 5 December, the central bank said on its website on Wednesday.
The nation's stocks had their biggest decline in almost four months this week and it is reported that China's manufacturing contracted for the first time since February 2009.
Premier Wen Jiabao aims to sustain the economic expansion as Europe's debt crisis saps exports, a credit squeeze hits small businesses and a crackdown on real-estate speculation sends home sales sliding.
ANZ Hong Kong-based economist Liu Ligang, who previously worked for the World Bank said "The deceleration of growth may have become faster than expected on increased external uncertainty, a sagging property market and difficulties for smaller companies.
The manufacturing report may be "worse than expected," Liu said.
The policy move yesterday came two hours before the US Federal Reserve, the European Central Bank and the monetary authorities of the UK, Canada, Japan and Switzerland said they were cutting the cost of emergency US dollar funding to ease strains in financial markets.
Spurring lending in China, the nation that contributes most to global growth may boost confidence as Europe's crisis worsens. Stocks and the euro rallied after the moves.
Growth is slowing across Asia, the region that led the world recovery, with India today reporting its economy expanded the least in two years and Thailand cutting interest rates.
In China, the clampdown on property speculation has added to the threat of a deeper slowdown after a 9.1 percent expansion in the third quarter that was the smallest in two years.
The nation's stocks had their biggest decline in almost four months this week and it is reported that China's manufacturing contracted for the first time since February 2009.
Premier Wen Jiabao aims to sustain the economic expansion as Europe's debt crisis saps exports, a credit squeeze hits small businesses and a crackdown on real-estate speculation sends home sales sliding.
ANZ Hong Kong-based economist Liu Ligang, who previously worked for the World Bank said "The deceleration of growth may have become faster than expected on increased external uncertainty, a sagging property market and difficulties for smaller companies.
The manufacturing report may be "worse than expected," Liu said.
The policy move yesterday came two hours before the US Federal Reserve, the European Central Bank and the monetary authorities of the UK, Canada, Japan and Switzerland said they were cutting the cost of emergency US dollar funding to ease strains in financial markets.
Spurring lending in China, the nation that contributes most to global growth may boost confidence as Europe's crisis worsens. Stocks and the euro rallied after the moves.
Growth is slowing across Asia, the region that led the world recovery, with India today reporting its economy expanded the least in two years and Thailand cutting interest rates.
In China, the clampdown on property speculation has added to the threat of a deeper slowdown after a 9.1 percent expansion in the third quarter that was the smallest in two years.
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