China eases minimum reserves for banks. For the first time this year, China’s central bank is reducing the amount of liquidity banks need to hold as reserves. This is to support the country’s economic recovery. The measure is badly needed, thinks China economics and development professor Peter Ho of the London School of Economics.
According to Ho, even in China there are worries about the banking crisis that began with the collapse of the Silicon Valley Bank in the US and which has now also affected Credit Suisse. Beijing is also operating with caution, according to the professor, because the country has just reopened after months of lockdown. “The Chinese economy is still somewhat vulnerable and so you should see that measure in that as well.”
Isolation
“Obviously it has to do with trying to get on track, by channeling, economic developments, both globally and domestically in China,” Ho says. According to the professor, China is afraid of what is happening in the Western banking system, but it is not the case that the Western banking system can be directly translated into the Chinese system. ‘In the Chinese system you have more than the state has a bigger hand in the entire banking management. And that means that China’s banking system is actually more isolated.’
72 billion dollars
On the other hand, the Chinese economy is not insensitive to what is happening in the rest of the world, as its economy is closely intertwined with it. Ho does not rule out that China will take further measures. Now $72 billion is being released, which isn’t much. Therefore, Ho thinks this is just a first measure. “I think China will wait a while for the cat to come down from the tree.”
Evergrande is definitely not out of the woods. It’s a possible sign that things are moving towards a more stable situation.”
Let’s say Ho sees some positive signs. “The real estate market grew by 0.3 percent, we also saw that Apple’s CEO arrived in China last weekend and that a very large American investment company, Neuberger Nieman, set up a 575 million dollars in China. Those are positive signs, aren’t they?’
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
