China’s central bank to cut reserve ratio, bolster property and capital market

People’s Bank of China governor Pan Gongsheng spoke at the Financial Street Forum in Beijing on Friday

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Opening ceremony of Financial Street Forum in Beijing. Photo: Handout

Published: 10:52am, 18 Oct 2024Updated: 5:36pm, 18 Oct 2024

China’s central bank stands ready to further cut the amount of cash that commercial banks must hold as reserve for the remainder of the year as it dials up policy changes and implementation to boost the economy after third quarter growth slowed further.

The People’s Bank of China plans to lower commercial bank’s reserve requirement ratio (RRR) by between a quarter and half a percentage point according to the liquidity situation, governor Pan Gongsheng told the Financial Street Forum in Beijing on Friday.

China last lowered the RRR as part of its suite of new heavyweight policies announced at the end of September.

Pan’s remarks come as the world’s second-largest economy saw its slowest growth in more than a year after gross domestic product rose by just 4.6 per cent in the third quarter, below the 4.7 per cent growth recorded in the second quarter but largely in line with expectations.

The subpar performance means the “around 5 per cent” target for 2024 will be difficult to attain, heaping further pressure on policymakers to roll out more stimulus measures.

Based on international experience and China’s past practices, targeted policies are needed

Pan Gongsheng, PBOC governor

At the forum, Pan revealed three main considerations in the central bank’s policymaking process.