More Support Measures Introduced to Help China’s Slow Economy
China recently announced fresh support measures to help its slowing economy after reports showed a worrying drop in bank lending and foreign investment growth falling on a two year low. The central bank stated that it will be lending 50 billion yuna to banks at a discounted rate to allow them to re lend to farmers and small businesses, which are economic areas that usually short of cash.
Also in the latest attempt to ease policy in a targeted manner to assist vulnerable sectors came as reports showed that foreign direct investment in China increased only 1.7 percent in 2014 that slowest pace since 2012. Ever since the second largest economy drew a record of US$119 billion worth of foreign direct investment last year, which slowly marked from grow of 5.3 percent in 2013.
The priorities of marco policy is to allow the economy to shift its gears without losing its speed. Furthermore the National Development and Reform Commission is expecting this kind of targeted easing to continue and is also expected three more cuts in the reserve requirement ratio with a total of 150 basis points. This suggested a surprise interest rate cut in November the first cut has not spurred demand for credit and banks still remain reluctant to lend.