China vows lower business financing costs, support for property sector in H2

BEIJING (Reuters) – China will lower financing costs for firms, stabilise market expectations and support the property sector in coming months, the central bank said on Tuesday amid a flagging economic recovery.

The world’s No.2 economy staged a better-than-expected recovery in the first quarter following COVID reopening but has lost steam since the April-June quarter as demand waned both at home and abroad.

The People’s Bank of China’s (PBOC) statement followed a meeting at which officials from the bank and the State Administration of Foreign Exchange (SAFE) looked to the second half of the year.

As the property sector had failed to get out of the woods yet, the PBOC pledged it would support a “stable and healthy development” of the real estate market, including continuing to guide the reduction of personal housing loan interest rates and downpayment ratios, according to the statement.

The PBOC will also guide commercial banks to adjust rates on existing mortgages in a legal and orderly manner.

A private survey showed on Tuesday average new home prices in 100 Chinese cities fell for a third consecutive month in July.

China will also pay close attention to cross-border capital fluctuations, keep the yuan basically stable and step up support for firms to hedge exchange rate risks, the PBOC statement said.

To ease pressure on the yuan, Chinese currency regulators have in recent weeks asked some commercial banks to reduce or delay their dollar purchases, Reuters reported on Tuesday, citing two people with direct knowledge of the matter.

The country will also coordinate financial support on the settlement of local government debt risks and effectively fend off financial risks in key areas, the statement said.

Pan Gongsheng, the PBOC governor as well as the head of SAFE, spoke at the meeting.

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