China needs more interest rate cuts to ease corporate financing and household mortgage costs, political advisers and experts say.
A faster-than-expected credit expansion signals a nascent recovery in the nation’s financing demand. Both China’s new yuan loans and total financing to the real economy in January hit all-time highs of 4.92 trillion yuan ($683.9 billion) and 6.5 trillion yuan respectively, according to the People’s Bank of China.
However, other indicators show a lingering weakness in demand. The growth in the consumer price index stands at -0.8 percent year-on-year in January, staying in negative territory for four consecutive months, the National Bureau of Statistics says.
The manufacturing sector has contracted for the fourth month in a row as the sector’s official purchasing managers index came in at 49.2 in January, below the 50-mark that separates expansion from contraction, the NBS says.
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