Enlarge image
Factory workers in Wuhan: Liquidity for the financial system
Photo: DARLEY SHEN/ REUTERS
In China, banks extended new loans at a record level at the beginning of the year, thereby providing impetus for the economic recovery. In January, the financial institutions granted new loans in the local currency with a total volume equivalent to around 634.5 billion euros, according to central bank data. This is more than four times the loan volume extended in December.
Financial institutions are usually particularly active in awarding contracts at the beginning of the year in order to secure market share and premium customers as early as possible. Nevertheless, the high award volume in January surprised even experts: experts surveyed by the Reuters news agency had only expected a sum equivalent to 581 billion euros.
Since the end of the Corona containment measures at the end of 2022, the People's Republic has had difficulty returning to the strong economy of before the pandemic. In order to support the economy, the central bank recently reduced the reserve ratio for commercial banks (RRR) - by half a percentage point. This released around one trillion yuan (the equivalent of around 128 billion euros) in liquidity for the financial system. The economic leaders in Beijing have announced that they will continue to support the economy. The central bank wants to use a flexible line to stimulate domestic demand while maintaining price stability.
In the People's Republic, prices fell more sharply at the beginning of the year than they had in over 14 years, raising concerns about deflation that would be damaging to the economy. The economy grew by 5.2 percent in 2023, achieving the target set by the leadership. But the recovery was far bumpier than many experts expected. However, the worsening real estate crisis and consumer restraint are weighing on the outlook for the current year.
mik/Reuters