The People’s Bank of China indicated that it’s serious about getting the world’s second-biggest economy back on track.
The central bank lowered its main policy rate, the one-year rate that has a big influence on bank funding costs, for the first time in 10 months. Earlier this week, it lowered a one-week interest rate and injected additional money into the banking system.
The move comes on the heels of disappointing data for retail sales and industrial production. That was just the latest sign that the recovery has been weak since pandemic restrictions on activity were lifted last year, dragged down by sluggish manufacturing and a slump in the once-booming property sector.
“There are real concerns emerging that the anticipated post-Covid recovery is failing to materialize,” said Darren Nathan, head of equity research at Hargreaves Lansdown.
Stocks cheered the fresh stimulus. Hong Kong’s Hang Seng Index (ticker: HSI) closed 2.2% higher on Thursday. Retailer
Alibaba’s
American depositary receipts (BABA) were up 1.5% in premarket trading.
Baidu
(BIDU) rose 1%, and
JD.com
climbed 2.2%. The
iShares MSCI China exchange-traded fund
(MCHI) added 0.6%.
Worries about growth are feeding expectations that Chinese authorities will do more to stoke demand in the near future. The government aims to achieve 5% economic growth this year. That’s the lowest target in decades, and comes after it badly missed its 5.5% target for 2022.
Write to Brian Swint at [email protected]
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