China signals policy easing as economy falters

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China has signalled it will further ease monetary policy to kick-start the world’s second largest economy by cutting the amount of funds that some banks must hold in reserve, according to a government statement.

The State Council, China’s cabinet, announced after a meeting on Friday that it would trim reserve requirements for banks which lend to the agricultural sector and small enterprises, said the statement posted on the central government website.

It gave no details of the timing or sum involved.

China launched a similar, targeted reserve cut for banks in rural areas just over a month ago as worries mount that its economy — a key driver of world growth — is slowing more sharply than expected.

“Currently, the movement of the economy is stable, but downward pressure is still relatively large,” the State Council said, adding the government would “fine-tune” policy at an appropriate time.

China’s economy grew an annual 7.4 percent in the first quarter of this year, weaker than the 7.7 percent in the October-December period and the worst since a similar 7.4 percent expansion in the third quarter of 2012.

Premier Li Keqiang in March announced an economic growth target of “around 7.5 percent” for this year.

“It is clear that the government has become more concerned about the continued economic slowdown and wants to further increase the strength of policy support,” Wang Tao, a Hong Kong-based economist for bank UBS, said in a research note.

“Policy support will strengthen as the economy weakens further, so as to defend the growth target for 2014,” she said.

The State Council announced a basket of other measures on Friday, including more financial support for small companies, lowering the cost of financing and cutting administrative fees, the statement said.

China’s economy grew an annual 7.7 percent in 2013, the same level as 2012, which was the worst pace since 1999.

But some analysts believe China will refrain from more aggressive measures to boost growth, such as slashing interest rates or cutting reserve requirements for all banks, on worries excessive credit could pose financial risk.

“Broad cuts to (reserve requirements) and benchmark interest rates are only likely if May and June data continue to surprise on the downside,” investment bank Goldman Sachs said in a research note on Saturday.

 

 

 

 

 

Source : Channel News Asia | June 1, 2014

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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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