China's Mini-Stimulus Continues: Reduced Restrictions On Rural Lending

The Peoples Bank of China yesterday moved further down the track of its targeted stimulus packages with a cut to the reserve requirements for banks lending to rural areas.

The Shanghai Daily reports the PBOC “cut the reserve requirement ratio for county-level rural commercial banks by 2 percentage points and that of rural credit cooperative unions by 0.5 percentage points from Friday.”

While the PBOC said that the “decision will not affect the overall liquidity in the banking system” it noted that the move will “help enhance financial support for rural development and guide credit flow to rural areas.”

This move comes on top of the recent mini-stimulus of investment into rail infrastructure and opening up of China’s interior and last week’s move outlining “a string of financial and tax moves to provide more support for the rural economy and create jobs.”

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