This is mainly aimed at further lowering borrowing costs and trying to boost consumption activity. China’s domestic demand conditions have suffered greatly since the outbreak of the Covid-19 pandemic and there has been no significant recovery in this area despite the world returning to normal.
The report says some banks are already making final preparations for the mortgage rate adjustments. The change could go into effect as early as this month. According to one source, some homeowners could enjoy up to 50 basis points of rate cuts immediately.
It’s a big step by Beijing, but again, we have to see how effective it will be. Beijing has already taken a number of steps in the past year or so, but none of them have been very fruitful. At this point, there’s a line of thinking that it’s more about demographics and mentality when it comes to understanding China’s economic struggles. And that’s what Xi Jinping is also trying to correct and promote with his “common prosperity” campaign.