China easing

China cuts reserve requirements as economy slumps

The People’s Bank of China will cut the reserve requirement ratio for banks as it moves to stabilise growth.
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Chinese banks now have more money to lend, but will borrowers want it? (ImagineChina)
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<div style="text-align: left;"> Chinese banks now have more money to lend, but will borrowers want it? (ImagineChina) </div>

China’s central bank said it would cut banks’ reserve requirements on Friday, after a set of disappointing trade data. Effective May 18, it will cut the reserve requirement ratio for banks by 50bp to 20%, which it hopes will free up lending and stimulate a recovery or at least avert a hard landing.

It will likely need to do much more, and soon, given the terrible data. Analysts surveyed by Bloomberg were expecting year-on-year import growth of 10.9% and export growth of 8.5% far higher than the actual print of 0.3% and 4.9%, respectively.

The slow growth in imports helped China’s trade surplus to beat expectations, but...

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