China must take strong stimulus measures to support growth: state media

China must take strong stimulus measures to support growth: state media

China must take strong stimulus measures to support growth: state media

"He has that kind of stability that if he needs to turn the taps back on, he doesn't need to worry about saying 'this pushes the budget out too much, too much debt, '" Nicholson added. It has even censored bad economic news.

Despite the PBOC's official stance that its monetary policy is not yet accommodative, the fourth RRR cut of the year came as trade tensions between China and the US escalate and will likely drag longer than many expect, analysts noted. The government is aiming to help small and mid-size businesses in particular, which have had trouble obtaining loans and face other rising pressures.

"Some of the difficulties encountered by enterprises are brought about by trade frictions and some due to China's economic transformation", Ning said.

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"The ongoing China-US trade war is imposing headwind to China's growth, and monetary easing is being used to counter that", ChiXi Consultants said in a research note to its clients on Monday. Trade is not as important to China as it once was, thanks in part to the rise of a middle class that has been a ready buyer of Chinese goods at home.

Analysts had attributed Monday's losses to Chinese investors playing catch-up after a week-long holiday, during which a sharp sell off in global bond markets had dragged down equity markets. In September, new export orders, one indicator of China's manufacturing, fell to the lowest level since 2016.

China has struck back with its very own arrangement of taxes and has blamed the United States for propelling the biggest exchange war in monetary history.

Consumers are spending less. At its two-day meeting ending later on Wednesday, the Fed is expected to increase US interest rates for the third time this year. Wage growth is plodding.

Tourism spending by domestic travellers in the first four days of the National Day holiday, which ended on Sunday, rose just 8.1% from past year, which is much less than the 21% growth recorded in 2017, according to figures from the China Tourism Academy.

The tightly controlled yuan has lost nearly 10 per cent of its value against the dollar this year. Some Chinese entrepreneurs also say the business environment is souring.

The central bank said on Sunday it would continue to take necessary measures to stabilize market expectations, while maintaining a prudent and neutral monetary policy. The stock accounts for 5.1 per cent of the weighting on the Shanghai Composite.

China's central bank announced Sunday it would reduce the reserve requirement ratio (RRR) for most banks by one percentage point, the fourth time this year the country has sought to free up credit for businesses as they face down $250 billion in United States tariffs. Therefore, the action will still result in a net injection of CNY750 billion.

"There is more optimism that they will find some agreement between Britain and the European Union before Brexit", said Steve Englander, global head of G10 FX research at Standard Chartered Bank in NY. This is the fourth time this year that the central bank has cut the reserve ratio.

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