Policy stimulus kicks in, laying ground for Q4 recovery in China

China is accelerating the implementation of a range of pro-growth measures, with a series of real-estate policy packages kicking in and a possible cut in banks’ reserve requirement ratio (RRR) in sight, paving the way for a sound recovery in the fourth quarter, observers said.

China’s banking and insurance regulator said on Thursday that nearly all special loans for unfinished or stalled housing projects have been delivered to developers, propelling the real estate sector’s rapid recovery.

Industrial and Commercial Bank of China, one of China’s top five banks, signed a strategic cooperation agreement head-to-head with 12 leading developers, to provide them a total of more than 650 billion yuan ($91.1 billion) of credit lines.

The 12 include Vanke Group, Gemdale Group, Greentown China, Longfor Group and Country Garden.

On Monday, Pan Gongsheng, deputy governor of the People’s Bank of China (PBC), China’s central bank, noted that the PBC will launch a 200 billion yuan loan support plan for six commercial banks, so that they can help guarantee house deliveries, according to mesia report.

“These are very strong signals that the country is strengthening stimulus to bolster and stabilize China’s economic growth as challenges are mounting,” Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Thursday.

Dong cautioned that the fourth-quarter economy is expected to stabilize with these policies, but more efforts are still needed to bolster market expectations.

China’s economy is expected to further recover in the remainder of the year as stimulus package kicks in, China’s top economic planner said last week, while warning that “arduous efforts” would still be needed to bolster growth.