China unveiled measures on Tuesday (Sep 29) designed to steer cheaper credit into a range of sectors including infrastructure and technology, as well as expanding support for home buyers, in a fresh bid to shore up its slowing economy.
The measures were announced a day after the cabinet pledged to step up counter-cyclical policy support to address rising economic strains, signalling greater urgency to put the economy on track to meet targets.
China is aiming for economic growth of 4.5-5 per cent this year, but the economy shows signs of losing momentum.
After growth slowed to 4.3 per cent in the second quarter, industrial output, retail sales and investment all weakened at the start of the third quarter, while the property sector remained entrenched in a prolonged downturn.On Tuesday, the People’s Bank of China said in a statement it would cut the rate on its pledged supplementary lending (PSL) by 25 basis points, and the rate on one-year PSL to 1.5 per cent from 1.75 per cent.
The PBOC will also broaden the PSL facility to support investment in water, power-grid, computing, communications, urban pipeline and logistics networks, it said.
The PBOC also raised the quota for its sci-tech innovation and technological upgrading relending facility by 200 billion yuan (US$29.84 billion) to 1.4 trillion yuan, and increased its relending quota for farm and small businesses by 500 billion yuan to 4.85 trillion yuan.
It raised its relending quota for private enterprises by 300 billion yuan to 1.3 trillion yuan.
Meanwhile, the central bank and financial regulator said China would subsidise interest payments on new commercial mortgages for eligible first-time homebuyers from Oct 1, in the country’s first nationwide measure of its kind.
The government will provide an annual interest subsidy of 1 percentage point for up to five years, with the subsidised loan capped at 1 million yuan per household, according to a finance ministry statement.
Eligible homes must have a floor area of no more than 120 square metres and a purchase price of no more than 1.5 million yuan. The policy will be implemented on a trial basis for one year.
Reuters
