According to the South China Morning Post , the measures focus heavily on reviving China's real estate market, which has been in a "stagnant" state for quite some time.
A series of heavy measures
Specifically, China cut the mortgage interest rate for existing housing and the reserve requirement ratio by 0.5 percentage points. According to China's financial industry leaders, the current mortgage interest rate reduction is expected to benefit 50 million households - equivalent to 150 million people, reducing the average household interest expense by about 150 billion yuan per year, which will effectively boost consumption and investment.
At the same time, the People's Bank of China (PBOC - the country's central bank) will also support land acquisition by real estate companies by studying measures to allow policy and commercial banks to provide loans to qualified companies to buy land. This solution is aimed at reviving land resources and easing financial pressure on real estate enterprises.
China's real estate market is facing many difficulties.
The South China Morning Post quoted expert Julian Evans-Pritchard, of Capital Economics - a UK-based economic consultancy, as saying: "This is the PBOC's most important stimulus package since the outbreak of the Covid-19 pandemic."
Solving problems
Thus, within 2 days, China continuously introduced many policies to stimulate the economy. On September 23, PBOC reduced the 14-day repurchase agreement (repo) interest rate by another 10 basis points, from 1.95% to 1.85%. Along with that, PBOC also used this tool to inject 74.5 billion yuan (about 10.6 billion USD) into the economy.
The above moves by Beijing are aimed at solving the difficult economic situation that has not shown much improvement, especially the real estate industry that has been stagnant for a long time.
Meanwhile, according to an assessment sent to Thanh Nien , Moody's Analytics commented: China's expanding exports in recent years have led to increased protectionism in many countries. Recently, some countries have increased tariffs on Chinese solar panels, electric vehicles, steel, aluminum and low-value retail goods. The list of countries raising tariffs includes developed economies such as the US, EU and Canada, as well as emerging markets such as Brazil, Mexico, Turkey and Pakistan.
The increased tariffs have made it more difficult for Chinese exports. More seriously, the US-China trade conflict has caused Beijing to face more challenges.
On the same day, September 24, the South China Morning Post reported that the Chinese Ministry of Commerce has launched an investigation into PVH Group (USA), the parent company of clothing brands Calvin Klein and Tommy Hilfiger. The reason is that PVH Group is suspected of "violating the principles of normal market transactions by arbitrarily boycotting Xinjiang cotton and other products".
Beijing’s move raises concerns that it could exacerbate US-China trade tensions. Meanwhile, as the US presidential election approaches, it is unlikely that Washington will ease tensions with Beijing.
Furthermore, even if the White House changes hands, the US-China disagreement will still be a big challenge for Beijing. Because, the effort to compete with China is a rare topic that receives consensus from both the Democratic and Republican parties in the US.
In particular, if former President Donald Trump is re-elected, Washington may issue many other policies aimed at Beijing. In an analysis sent to Thanh Nien , Dr. Ian Bremmer, President of Eurasia Group (USA) - the world's leading political risk research and consulting unit, predicted: "If elected, Mr. Trump will have a tougher stance on China's competition. This will start with the return of Mr. Robert Lighthizer, a trade expert considered a "hawk" under Mr. Trump, and promote much higher tariffs on imports from China."
This reality forces China to quickly revive its economy to be ready to face greater challenges that may arise in the near future.
Impact on the region
According to Moody's Analytics, geopolitical and trade tensions, political uncertainty, and unstable growth in China are the biggest challenges for the Asia-Pacific region. In particular, the unfavorable economic situation in China, especially low demand, has affected the exports of regional countries to China.
Source: https://thanhnien.vn/trung-quoc-manh-tay-giai-cuu-nen-kinh-te-185240924221346524.htm
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