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China to Cut Reserve Ratio for Some Rural Banks

04-17 10:47 Caijing
Chinese Premier Li Keqiang said reserve requirements would be relaxed for qualifying rural banks in a sign that more loosening policies are likely on the way.

Chinese Premier Li Keqiang Wednesday said reserve requirements would be relaxed for qualifying rural banks in a sign that more loosening policies are likely on the way.
 
The premier didn't say when and by how much the reserve ratios would be lowered.

The People's Bank of China (PBoC) sets different reserve requirements for banks, depending in part on the size of their loan business. The ratio stands at 20 percent for China's biggest banks, around 16 percent for smaller, rural banks.

Li's remarks made at a regular meeting of the State Council came after the latest statistics showing China has registered the slowest growth quarterly growth rate since the third quarter of 2012.

China's gross domestic product grew 7.4 percent year-on-year to CNY12.82 trillion for the first quarter this year, lower than the 7.5 percent annual target set by the government.

Analysts have expected the central bank to cut reserve ratio for banks in the second quarter amid growing concerns on growth.

Chinese officials said the recent economic figures reflected the economy entering a new period of lower growth where the focus would be on structural adjustment – away from investment-driven growth to boosting domestic demand and high technology industries.

M2, a broad measure of money supply increased by 12.1 percent year-on-year at the end of March after a gain of 13.3 percent at the end of February, the first time below the central bank’s 13 percent target since April 2012. 

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