China Cuts Lending Rate as Its Economic Growth Slows
By KEITH BRADSHER
Published: June 7, 201
The action by the People’s Bank of China represents the strongest
measure by the Chinese government to counteract an economic malaise that
has already infected Europe and the United States and now seems to be
affecting China faster and more extensively than most policy makers or
private economists anticipated.
Lowering interest rates makes it easier for companies and individuals to borrow money and start spending again.
The People’s Bank of China announced that the regulated one-year
corporate lending rate will drop to 6.31 percent, from 6.56 percent,
effective Friday.
In a parallel move that will amplify the practical effect of the rate
cut, the central bank also said that commercial banks will be allowed to
further reduce the lending rate by one-fifth for good customers; the
previous discount had been one-tenth.
Banks will also pay less interest on deposits, however, which could hurt
savers. The one-year deposit rate will drop to 3.25 percent from 3.5
percent, the People’s Bank of China said on its Web site.
The spreading economic distress in China is readily apparent these days,
from the street markets of export-dependent coastal provinces, where
factories are closing, to the construction sites of investment-hungry
inland provinces, where most developers have switched from three shifts a
day to a single shift.
In Qingxi, an export-dependent township of Dongguan in southeastern
China, a wave of bankruptcies among exporters of car stereo components
has resulted in mass layoffs, with a ripple effect of falling sales at
local retailers.
In interviews late Thursday morning in Qingzi, a range of business
people complained that the economy now is even worse than in early 2009,
when factories closed and millions of migrant workers lost their jobs
during the early stages of the global financial crisis.
“Nobody is spending,” complained Yu Jia, the owner of a general store in
selling everything from tofu to laundry detergent. Her sales have
fallen by nearly a third since Chinese New Year in late January, she
complained.Copiado : http://global.nytimes.com/
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