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China cut interest rates for the third time in two months to stimulate growth in the world's fourth-largest economy after the global financial crisis curbed exports and production. The key one-year lending rate will drop to 6.66% from 6.93 %, the People's Bank of China said on its website on Wednesday. The deposit rate will fall to 3.60 % from 3.87% . The changes are effective tomorrow.
China's expansion dwindled to 9 per cent in the third quarter from 11.9% in 2007 and industrial production grew at the slowest pace in six years in September as export markets dried up.
The Federal Reserve may reduce its benchmark rate today and the European Central Bank has signaled that it's poised for a similar move. "This cut was driven by the slowdown in the third quarter and the likelihood that the US and other central banks will cut rates,'' said Xing Ziqiang, an economist at China International Capital Corp in Beijing. "It isn't likely to have an immediate impact on China's economy; what's needed is more government spending.''
Economic growth has slowed for five straight quarters. Signs of weakness span property, industrial production, export orders, and the 69 percent fall in the CSI 300 Index of stocks this year.
The rate cut "shows that the government is pulling out all the stops to make sure that the gentle economic slowdown seen so far doesn't turn into something more serious,'' said Mark Williams, an economist at Capital Economics Ltd. in London. Export orders dropped in the third quarter to the lowest level since 2005. Home sales plunged 55.5% in Beijing and 38.5% in Shanghai in the first eight months from a year earlier, according to the official Xinhua News Agency.
Bloomberg
China's expansion dwindled to 9 per cent in the third quarter from 11.9% in 2007 and industrial production grew at the slowest pace in six years in September as export markets dried up.
The Federal Reserve may reduce its benchmark rate today and the European Central Bank has signaled that it's poised for a similar move. "This cut was driven by the slowdown in the third quarter and the likelihood that the US and other central banks will cut rates,'' said Xing Ziqiang, an economist at China International Capital Corp in Beijing. "It isn't likely to have an immediate impact on China's economy; what's needed is more government spending.''
Economic growth has slowed for five straight quarters. Signs of weakness span property, industrial production, export orders, and the 69 percent fall in the CSI 300 Index of stocks this year.
The rate cut "shows that the government is pulling out all the stops to make sure that the gentle economic slowdown seen so far doesn't turn into something more serious,'' said Mark Williams, an economist at Capital Economics Ltd. in London. Export orders dropped in the third quarter to the lowest level since 2005. Home sales plunged 55.5% in Beijing and 38.5% in Shanghai in the first eight months from a year earlier, according to the official Xinhua News Agency.
Bloomberg
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