It’s the People’s Bank to the rescue.
Today, December 7, the People’s Bank of China announced that it would reduce the reserve requirement for most banks in China by 05 percentage points on December 15.
The move has the effect of releasing 1.2 trillion yuan, about $188 billion dollars, in liquidity into China’s economy.
Of course, the move had absolutely nothing (insert grin and a wink emoji here) with Friday’s plunge in the price of Chinese stocks such as Alibaba and Tencent Holdings that trade on the New York Stock Exchange on news that food delivery giant Didi Global planned to delist from that exchange and sell its shares instead in Hong Kong.
Today shares of Alibaba (BABA) were up 7.95% as of 12:40 p.m. New York time. Tencent Holdings (TCEHY) was ahead 1.22%. JD.Com (JD) was off 3.53%. And Didi Global (DIDI) itself gained 7.33%.
The reserve release was the second of 2021, after the bank’s move in July. China’s economy is slowing and it’s real estate market has shuddered to a halt as developer China Evergrande sees its bonds go into default.
The bank said the move will maintain the overall direction of its monetary policy and avoid a “flood-like” stimulus.
Yeah, what’s another $188 billion? A trickle?
China’s economy is indeed in some difficulty from a combination of external (the global Pandemic and the resulting collapse in demand) and internal (yet more real estate and shadow banking speculation) causes and the People’s Bank’s stimulus is an effort to prevent a problem from evolving into a crisis ahead of the showcase of the February Winter Olympics in Beijing.
