People's Bank of China Governor Pan Gongsheng unveiled a broad stimulus package on 24 September 2024 that combined a reduction in the reserve requirement ratio with cuts to existing mortgage rates and a new facility designed to support equity markets. The announcement was made at a State Council Information Office press conference in Beijing.
The reserve requirement ratio will be reduced by 50 basis points, a move the central bank said would release approximately CNY 1 trillion in liquidity into the banking system.
MORTGAGE RELIEF AND EQUITY MARKET SUPPORT MEASURES
Alongside the RRR cut, Governor Pan confirmed that interest rates on existing residential mortgages would be lowered towards new-loan rates, an average reduction of about 50 basis points.
The package also included a new swap facility, with an initial size of CNY 500 billion, for securities firms, fund managers and insurers, alongside a CNY 300 billion relending facility to fund share buybacks. The facility allows eligible institutions to swap assets such as bonds, stock ETFs and CSI 300 constituent shares for highly liquid assets such as government bonds and central bank bills, with the funds to be used for equity investment.
These measures — which also included a 20-basis-point cut in the seven-day reverse repo rate to 1.5% and a cut in the minimum down payment for second homes to 15% from 25% — were announced at the same press conference.
Officials indicated that further measures could be considered if economic conditions warranted.