China Introduces Aggressive Economic Measures to Combat Sluggish Growth

CNChina|

In an effort to stimulate its struggling economy, China has implemented a series of significant support measures since September. As the country faces challenges such as sluggish domestic spending, a prolonged downturn in the property market, and increasing trade tensions, officials in Beijing are taking decisive steps to ensure sustainable growth in 2025.

Key interventions announced include consumer subsidies aimed at boosting spending. To address a near slip into deflation observed in December, authorities have expanded a program that allows consumers to replace old household appliances with modern alternatives at discounted rates. This initiative has been extended to include various electronics like smartphones and tablets.

Additionally, the People's Bank of China has slashed key interest rates to historic lows, aiming to lower borrowing costs and stimulate economic activity. The one-year Loan Prime Rate has decreased from 3.35% to 3.1%, while the five-year rate has dropped from 3.85% to 3.6%. Central bank officials indicate the possibility of further rate cuts as part of a policy shift towards a "moderately loose" monetary stance.

In a bid to revive its beleaguered property sector, which has seen significant declines due to regulatory crackdowns and high levels of debt among developers, the government has introduced several policies. These include reducing deed taxes for first-time home buyers in various major cities and relaxing restrictions on home purchases.

To address the burden of local government debt, the Chinese government has approved a plan to convert hidden debts into more manageable official loans, a move expected to ease financial pressures on local authorities.

Despite these efforts, analysts remain cautious about the potential for a swift recovery in the property sector, suggesting that while initial signs of improvement may emerge, there is "no quick fix" in sight.

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