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China injects Rmb500 billion to address weak growth

The People's Bank of China (PBOC) has injected Rmb100 million in each of the nation's five largest banks to boost liquidity as it addresses slowing growth. China's three-month term injection follows the same path as the broad-based stimulus of the US after the global financial crisis and is designed to fuel demand for credit in a debt-ridden economy. Economists have called it “quantitative easing with Chinese characteristics” and said that further growth slowdowns will warrant more easing.

Source:
Bloomberg

This shows that China's monetary policy is leaning toward easing, although the stance may change next year. The lack of an official announcement regarding the policy shows that the PBOC does not want to send a strong signal of easing. Recent reports of weak industrial output expansion, slowing retail sales growth, pullback in manufacturing and a drop in imports all highlighted the risks of a deepening economic slowdown. This injection was the first clear response to the quarter's weak data and monetary conditions are expected to loosen up modestly. The policies to follow will depend on market performance.

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