China to cut requirement reserve ratio by 1 percentage point

China to cut requirement reserve ratio by 1 percentage point

China and the United States will hold vice ministerial level trade talks in Beijing on January 7-8, as they seek to end a dispute that is inflicting increasing pain on both economies and roiling global financial markets.

The People's Bank of China said the reserve requirement ratio will be lowered by 1.0 percentage point, with the stimulus going into effect later this month.

The PBOC will cut the RRR by 0.5 percentage points on January 15 and January 25, respectively, a PBOC statement said.

Beijing will also step up "countercyclical adjustments" of macro policies and further cut taxes and fees, Mr Li said.

Additional liquidity easing in the financial system, expected by many analysts, will also support local governments' 2019 financing plans, which mainly rely on a speeding up of bond issuance.

But analysts see a further deceleration this year, with growth cooling to the low 6-percent range even if a trade deal with the United States is reached.

"It is hard to clearly understand the overall policy effect as every institution has to make their own calculations", said Ding Shuang, chief Greater China economist at Standard Chartered Bank. Factors such as corporate tax payments will drain 1.2 trillion yuan, Citic said.

May Faces Battle To Save Brexit Deal As Commons Showdown Looms
The vote has been rescheduled for the week starting January 14 after a debate which is scheduled to begin in the coming week. Describing what would happen if she was defeated, May told the BBC: "We're going to be in uncharted territory".

Beijing is seeking to implement a "proactive fiscal policy" to stimulate economic activities with China's growth set to decelerate further after the headline gross domestic product (GDP) growth rate dropped to the lowest level in a decade in 2018.

In December 2018, World Bank said China's economic growth is likely to slow to 6.2% in 2019 from an expected 6.5 percent this year.

This will allow banks to lend more capital to enterprises now classed as small businesses, and therefore free up more reserves from the central bank, with estimates ranging from 400 billion yuan to as much as 700 billion yuan.

On Wednesday, the PBOC changed the definition of a small business, meaning an enterprise with a credit line of less than 10 million yuan will qualify for targeted RRR cuts, up from the previous standard of 5 million yuan.

He made the comments at a meeting with officials of the country's banking and insurance regulator after visiting Bank of China, Industrial and Commercial Bank of China and China Construction Bank.

Chinese monetary policy will be targeted to better serve real economic growth and buffer economic downside risks next year, in order to avoid aggressive credit expansion, according to policy advisers.

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