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Government in China to loosen bank lending

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The Chinese government moves towards more expansion of the economy as it decides to boost bank lending, The Wall Street Journal reports. The People’s Bank of China said on Saturday that it will cut banks’ reserve requirement ratio by 0.5 percentage point, effective Feb. 24, in a move to help boost liquidity and support the economy, the paper says. The reserve requirement ratio is the percentage of deposits that banks must hold in reserve rather than lend out. The ratio for most large banks will decline to 20.5% after the cut.

The Chinese economy has seen a downturn in growth, which has gone below 10 percent. Keeping the growth rate at a certian speed is crucial, while at the same time the government needs to keep inflation down and balance the widening income gap within the country.

The Editorial Staff of