With industrial production growing at the slowest pace since the worst of the global financial crisis and foreign direct investment in a tailspin, China appears to have taken the unusual step of using monetary stimulus in an attempt to forestall further economic weakness.
China’s central bank has lent 100 billion renminbi, or $16.2 billion, to each of the country’s five main, state-controlled banks, bankers and economists said Wednesday, although the central bank and the five banks involved stayed silent. The seemingly stealthy decision to inject a total of $81 billion into the banking system this week came as the Chinese economy, like many economies in Europe, has slowed over the summer, although still expanding at a pace that would be the envy of most countries around the world.
The move by the central bank, the People’s Bank of China, to transfer the money directly to state-controlled banks drew immediate criticism from economists at international banks. The central bank had been seeking in recent months to reduce the role of bureaucratic guidance in China’s financial sector, relying instead on pushing interest rates up and down and then letting market forces allocate money among borrowers and lenders.
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Keith Bradsher, New York Times via CHINA US Focus http://feedproxy.google.com/~r/ChinaUsFocus/~3/0SNHxl9ykMQ/
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