China launches late stimulus push to meet 2024 growth target

China’s central bank lowered interest rates and injected liquidity into the banking system on Friday as part of a major stimulus effort aimed at boosting economic growth.

The People’s Bank of China cut the reserve requirement ratio (RRR) for banks by 50 basis points, releasing 1 trillion yuan ($142.5 billion) into the financial system.

These measures, including a 20-basis-point cut in the benchmark interest rate for reverse repurchase agreements, are designed to address deflationary pressures and revive the economy, which has been hit by a property downturn and weak consumer confidence.

Additional fiscal measures are expected soon, including 2 trillion yuan ($284 billion) in special sovereign bonds, aimed at stimulating growth and supporting local governments struggling with debt.

The government is also planning consumer subsidies, child allowances for families with two or more children, and upgrades to business equipment.

This move follows a Politburo meeting where China’s leadership signaled a sense of urgency about economic headwinds.

China’s real estate market is also in focus, with major cities like Shanghai and Shenzhen expected to ease home purchase restrictions to stimulate demand.

The world’s second-largest economy faces increasing challenges, as industrial profits swung into a sharp contraction in August, and concerns grow about missing its 5% growth target for the year.