– Further slowdowns ahead –
China’s leaders are trying to pull off a managed slowdown of the Asian giant to make growth more sustainable and led by consumer spending as in other major economies.
The slowdown in China’s economy last year prompted some intervention by authorities to establish a floor on growth even as they tout a retooling of the country’s economic model that is expected to result in further slowdowns in the years ahead.
The People’s Bank of China (PBoC), the central bank, announced Wednesday an across-the-board cut in the percentage of funds banks must hold in reserve, seen as a way to free up more cash for lending and stimulate growth.
That move followed the PBoC’s decision in November to cut benchmark interest rates for the first time in more than two years.
Wednesday’s central bank announcement on cutting the reserve requirement ratio came on the heels of official survey results released last weekend showing China’s manufacturing activity contracted for the first time in more than two years, signalling further downward pressure on the economy.
China’s premier Li Keqiang has said publicly that weaker GDP growth is no problem so long as its quality remains high and job creation remains resilient.
Creating jobs in the world’s largest country by population is a political priority for the ruling Communist Party, which depends largely on economic growth as a source of domestic support.
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