China to prepare ‘more powerful’ steps to support economy | 2018-10-21 |

China to prepare ‘more powerful’ steps to support economy

21 October, 2018 12:00 AM printer

BEIJING: China should get ready "more powerful" policy measures, possibly including a large-scale stimulus package, to prevent its economy from stalling as trade frictions with the United States persist, a state-backed tabloid said in a commentary on Thursday.

Over the weekend, the People's Bank of China (PBOC) announced its fourth cut in banks' reserve requirement ratios (RRRs) this year to further ease credit conditions and support businesses, including exporters hit by China's intensifying trade war with the United States, report agencies.

Economists predicted more RRR cuts ahead, though China has repeatedly said it will not resort to massive stimulus, concerned about introducing excessive leverage into the financial system.

Chinese corporates are still working to lower their debt levels following Beijing's 4 trillion yuan (S$795.07 billion) stimulus package a decade ago.

"Depending on the economic situation, it should prepare more powerful monetary and fiscal policy tools, possibly including a large-scale stimulus package," the commentary in Global Times said.

"Compared with the RRR level of 9.5 per cent in 2007, there is still room for further reduction in the current ratios of 14.5 per cent for large financial institutions and 12.5 per cent for small and medium-sized lenders."

The Global Times, in a similar commentary on Monday, said China must take strong stimulus steps to support growth, with the country in a "critical" period of stabilising its economy.

The views in the newspaper, which is run by the ruling Communist Party's official People's Daily, do not necessarily reflect Chinese government policy.