Amid concerns of a slowdown in China’s economic activity, the Chinese government has announced a series of measures to revive growth. Analysts predict that these policies could go beyond previous initiatives and support both consumption and property market.
Reviving the Property Market:
The Chinese government is expected to introduce additional policies to support the struggling property market, following recent measures that failed to sustain a rebound. Analysts suggest that these forthcoming policies could surpass previous initiatives, potentially extending beyond down payments and purchasing restrictions. Industry experts anticipate the introduction of more supportive measures as soon as this month, aiming to address the sales slump witnessed in April and May.
Boosting Automobile Consumption
As part of the “2023 Consumption Boost Year” initiative, the Ministry of Commerce has announced a series of automobile consumption promotion activities scheduled from June to December 2023. The main objectives of these activities are to stabilize and expand automobile consumption, revitalize the automotive market, promote new energy vehicles, and benefit the general public. To achieve these goals, the ministry emphasizes the need for preferential policies, strong organizational support, effective publicity, fair competition, and comprehensive evaluation of the outcomes.
To encourage car purchases, financial institutions are being urged to introduce credit support measures for individuals. Additionally, local governments and car manufacturers will implement specific measures tailored to support vehicle sales. China also plans to enhance the charging infrastructure for electric vehicles in rural areas, further promoting the adoption of new energy vehicles.
Interest Rate Reductions by Major Banks
According to Bloomberg, several of China’s largest banks have lowered rates on various deposit products. Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., Bank of China Ltd., Bank of Communications Co., and China Construction Bank Corp. have reduced rates on three-year and five-year deposits by 15 basis points and annualized rates for demand deposits by 5 basis points. Furthermore, two-year deposit rates will drop by 10 basis points.
These rate cuts aim to help ease deteriorating margins for banks and facilitate cheap loans to small businesses and home buyers, as encouraged by Chinese authorities. In addition, it could force households to spend savings accumulated over the past few years.
Bottom Line: The Chinese government’s introduction of new policies reflects its determination to address the challenges faced by the property market and boost consumption especially for cars. By implementing measures such as adjustments in down payment requirements, preferential credit support for car purchases, and interest rate reductions, the government aims to stimulate demand, invigorate economic recovery, and benefit both the general public and specific industries. These policies are expected to provide a much-needed boost to the struggling sectors and contribute to overall economic growth in China.