Pan Gongsheng was named party secretary of the People’s Bank of China on July 1, 2023.
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BEIJING — China pledged to reduce the amount of liquidity that its banks are required to hold as reserves early next month in its bid to boost its struggling economy.
Reserve ratio requirements for banks will be cut by 50 basis points from Feb. 5, which will provide 1 trillion yuan ($139.8 billion) in long-term capital, Pan Gongsheng, the People’s Bank of China governor, said at a press conference in Beijing Wednesday.
This is the first reduction in reserve requirements this year, after two cuts last year. The PBOC also said Wednesday there’s room for further monetary policy easing. Reducing the reserve requirements that banks must maintain will increase the capacity for lenders to extend loans and spur spending in the broader economy.
Data released last week showed the world’s second-largest economy grew 5.2% in 2023, broadly in line with official projections. Its fourth-quarter GDP print also stood at 5.2%, but fell just shy of economists’ median estimates.
Its post-Covid recovery has been lackluster, with China’s top leaders warning that recovery will be “tortuous.”
Beijing is seeking to bolster growth in a targeted manner, while engineering a deleveraging of its once-bloated real estate sector, with some of its largest real estate developers facing serious debt problems. This has intensified financial risks and roiled consumer confidence.
China vowed Monday to “strengthen the market’s inherent stability” amid a rout in the country’s onshore and offshore stock markets.
This is a developing story. Please check back for more updates.