China pumped billions into its banking system in the form of medium-term loans, keeping interest rates in the status quo. The move is the latest in a string of financial support provided by the Chinese government.
The People's Bank of China or PBOC funneled $43 billion through the medium-term lending facility. Of that, 286 billion yuan will be utilized to extend loans that are nearing maturation.
The move results in a difference of about $2 billion, offering the one-year loans at 3.25%, Bloomberg reported. This followed a previous $16 billion funding into the banking system made on 6 Dec and another $29 billion on 15 Nov. The PBOC also cut loan cost in November.
Officials said channeling funds into the local banking system is aimed at further lifting the country's economy which is now the second-largest in the world, closely nearing that of the United States. Officials said the country will sustain economic growth for the next years with more favorable monetary policies.
The local government's efforts are paying off with November economic activity showing robust signs of stabilization. There have been remarkable jumps in China's different market sectors in November, according to several data.
The Wall Street Journal reported that China's industrial output jumped 6.2% from 2018. The increase is also observed in the retail sector, registering a jump of 8% and beating estimates of only 7.6%.
Data coming from the National Bureau of Statistics showed a broad-based increase when looking at the Chinese economy as a whole. NBS spokesman Fu Lingshui said the data proved that the local economy is geared towards positive development and displayed significant resiliency.
Reports on impressive economic activity had economists at UBS and Oxford Economics excited. They are now looking toward a 6% economic growth for the Asian powerhouse by 2020. Their previous estimate was only at 5.7%. The analysts also attributed the increase in optimism following the China-US phase one deal.
China is currently sitting on a $13-trillion economy and no amount of global pressures and geopolitical conflicts could shake it up. Officials said the country's economy is resilient more than how outside observers are trying to portray it. Sheng Songcheng, the former chief of statistics at POBC, sang the same tune.
Songcheng said China could easily reach and may surpass the goal of 6% economic growth. The country has significant infrastructure investments and growing consumer spending that can support China to reach the 6% goal.
