How Much Will New Stimulus Improve China’s Economic Outlook?

After months of downbeat economic news and little action from the Chinese government, Beijing has announced a slew of stimulus measures. At the end of September, the central bank announced interest rate cuts and a 500 billion renminbi(U.S.$71.30 billion) program to fund stock purchases by brokers, funds, and insurers, causing an immediate surge on China’s markets. Other stimulus measures included interest rate cuts, lower mortgage rates for existing loans, and a reduction in the down payment ratio for second homes from 25 percent to 15 percent. On October 12, Finance Minister Lan Fo’an said the government is looking at additional ways to boost the economy. 

On October 17, Minister of Housing and Urban-Rural Development Ni Hong announced that by the end of the year the government will increase the number of housing projects eligible for financing, and raise bank lending for those developments to 4 trillion renminbi (U.S.$562 billion).

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