Data for July has highlighted the intensifying pressure on the economy on a number of fronts, including a property downturn and deflationary pressure, prompting Beijing to introduce direct stimulus to revitalise growth.
The People’s Bank of China (PBOC) will “better leverage the dual functions of aggregate and structural monetary policy tools and firmly support the recovery and development of the real economy,” the bank said in its second-quarter monetary policy implementation report.
The PBOC unexpectedly cut key benchmark interest rates for the second time in three months on Tuesday, in a bid to support a sputtering economic recovery. Markets widely expect the bank to loosen monetary policy further.
The world’s second-biggest economy is facing “insufficient demand and challenges such as difficult business operations and high risks and hidden dangers in key areas” amid “deglobalisation risks” and a weakening global recovery, the central bank said.
In response to a deepening property market crisis, the central bank also said it would adjust and optimize property policies in a timely manner.
Debt problems at Country Garden, China’s largest property developer, and falls in home prices and sales have added to worries that the property sector crisis is stifling what little momentum China’s economy has left.
The central bank said it would pay close attention to risks in key areas and coordinate financial support to resolve local debt risk.
China will also prevent overshooting risks of the yuan exchange rate and fend off systemic financial risks, the central bank said.
Source: Economy - investing.com
