China Government targets banks, workers, and the poor with $142 billion infusion to revive economy as National Day approaches.
China is stepping up its game to boost the economy, focusing on banks, workers, and families with less money as the Communist Party gets ready to celebrate its 75th birthday.
Rumors from the South China Morning Post and Bloomberg suggest the government is planning to spend about 1 trillion yuan (around $142 billion) to give a big boost to six major state-owned banks.
This comes after Li Yunze, the head of the National Financial Regulatory Commission, mentioned that they’re going to pump more money into these key banks.
These banks are in trouble because of bad loans from real estate developers because of a tough crackdown on too much borrowing, which is putting a lot of pressure on the banking world and making this latest bailout necessary.
With banks making less money from interest rates and profits, Li pointed out the need to find different ways to get more money into the banks.
At a meeting about the economy on Thursday, President Xi Jinping and other top officials talked about new problems and challenges the economy is facing.
They promised to help out new graduates, people moving for work, those without jobs, the elderly, and people with disabilities.
China redoubles first-aid for its economy with support for banks and workers https://t.co/9W3pYbjJcU
— The Washington Times (@WashTimes) September 26, 2024
This latest cash injection for the banks, along with other economic steps, marks a second round of stimulus this week as China tries to get its economy back on track after the COVID-19 pandemic.
Financial markets are happy about it, with Hong Kong’s Hang Seng index going up 4.2%, the Shanghai Composite climbing 3.6%, and the Shenzhen market seeing similar gains.
Other Asian and European markets are also doing well.
The push to grow the economy, which started earlier in the week with a press conference by central bank officials talking about how to revive the struggling property sector and financial markets, included plans like cutting bank reserve requirements, lowering interest rates and making it easier for people to get mortgages.
After the Politburo’s latest meeting, there was a call for “additional policies” to deal with new challenges.
However, Julian Evans-Pritchard from Capital Economics mentioned that it’s not clear if these policies will include the big financial support needed to keep the economy stable.
As China’s leaders work to show the public they’re doing everything to fix the economy before the big National Day holiday on October 1, they’re also rolling out special cash handouts for families with less money.
While we don’t know the details of these “living allowances,” the ruling Communist Party has a history of giving financial help to struggling families during big celebrations.
“We need to really look at the economy from all angles, be fair and calm in our assessment and tackle problems head-on, boost confidence, and work harder to solve economic issues,” said the statement from the Politburo meeting, showing their commitment to fixing the economy during this important time.
