finance news

China unveils measures to boost economy & support housing sector

China unveils measures to boost economy & support housing sector
China unveils measures to boost economy & support housing sector

The People’s Bank of China (PBOC) plans to cutdown reserves for banks by 0.5% points, injecting 1.2 trillion yuan ($188 billion) in the economy

The politburo of China has reportedly signaled efforts to jump-start the nation's tumbling economy, as its debt-ridden real estate sector continues to impact development hopes.

Recently, President Xi Jinping's senior leadership committee approved a central bank proposal for further targeted commercial lending and indicated aid for the property market.

The People's Bank of China (PBOC) stated that it would reduce the reserve requirements for most banks by 0.5% points, setting an additional 1.2 trillion yuan ($188 billion) for the economy.

According to sources, attendants at the meeting chaired by President Xi stated that the housing measures would support healthy development as well as positive cycle for the real estate market.

Despite the fortunate outcome of the politburo discussion, Evergrande, the nation's second-largest real estate developer, was edging closer to what might be the worst business disaster in Chinese history.

To prevent an automatic default, it needed to pay $82.5 million in bond repayments by Monday midnight, EST. However, four people familiar with the situation mentioned that some bondholders did not get coupon payments by the deadline.

A collapse would result in cross-defaults on all Evergrande's roughly $19 billion in dollar debt in international financial markets, putting the organization at risk of being China's biggest-ever defaulter, unsettling global investor confidence further.

However, most experts now suggest the business will have to go through a major reorganization in order to disperse its debts across the economy.

China's economy is not developing as swiftly as projected, due to the challenges such as a slowed global economy, ongoing Covid outbreaks, and a weakening property sector, once a crucial source of development but now beset by defaults.

The IMF decreased its growth predictions for China to 5.6% in 2022 in October, which is massive by developed-country measures but modest by recent Chinese ones.

Source credit: https://www.theguardian.com/world/2021/dec/07/china-unveils-package-to-boost-economy-amid-imf-growth-warning

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