China’s central bank is injecting CNY500bn or $81bn into the nation’s top five lenders for a three-month period to bolster the country’s flagging economy.
The five banks said to be receiving the stimulus are the Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and Bank of Communications.
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The People’s Bank of China (PBOC) will lend CNY100 billion each to the five state-owned banks through a relatively new mechanism known as the standing lending facility.
The move follows a string of weak data on industrial production, retail sales, imports and foreign direct investment, escalating concerns over a growth slowdown.
The amount is equivalent to a 50 basis point cut to China’s reserve requirement ratio, the level of cash banks must deposit with the central bank.
Recently, the European Central Bank also began a program to provide banks with extremely low-rate loans, provided that they relend the money in the private sector.
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