China to cut some reserve requirements amid trade war fearsPosted by kuailai99 on June 26th, 2018 BEIJING, China - A day before the new U.S. tariffs are due to be imposed on Chinese imports worth billion, China’s central bank will implement its new policy that comes amid a heated trade conflict between the world’s two largest economies. To get more china national news, you can visit shine news official website. On Sunday, the People's Bank of China said in a statement that it would cut the amount of cash that some banks must hold as reserves by 50 basis points (bps). The move, it said would release 8 billion (700 billion yuan) in liquidity at commercial banks and the largest state-owned banks, to accelerate the pace of debt-for-equity swaps and spur lending to smaller firms. The central bank said that the policy will come into effect on July 5. According to analysts, China's central bank was prompted into taking the action as the prospect of tariffs added to the lacklustre economic data reported last month. Last week, the state council hinted at more central bank moves and PBoC’s latest announcement is the third time reserves were lowered this year. The central bank meanwhile has pointed out in its announcement that banks will use funds freed up from the RRR cut to finance small businesses and support "debt to equity swaps.” The required cuts will apply to the country's five largest state banks along with 12 commercial banks who were encouraged to swap out company debt owed to them for equity. Ting Lu, chief China economist at Nomura investment bank, said in a note, "It sends a strong signal of policy easing on the part of the State Council (cabinet) and the PBoC. We believe the Chinese economy is yet to bottom out and the situation could get worse before getting better.” Like it? Share it!More by this author |