China Cut Bank Deposit Rates for the Third Time: Key Factors Explained

China Implements Bank Deposit Rate Reduction: Insights and Implications

The Chinese government cut deposits for the third time in a year, and it will signify that the Chinese government is concerned about slowing the economy. By cutting deposit rates, it will be easier and cheaper for businesses and individuals to borrow money, which could help stimulate spending and investment. The lenders cut rates on the one-year time deposit by 10 basis points (bps) to 1.55%, the two-year time deposit by 20 basis points, and the three-year and five-year time deposits by 25 basis points. The deposit rate cuts are the third such cut within a year, with the scale of cuts bigger than previous rounds in June and September last year.

• The Chinese economy’s growth rate rose by 8.1% in 2022, and this was expected to slow to 5.5% in 2023. The Chinese government was facing a lot of challenges, especially the ongoing trade war with the United States, which was also a reason for the slowdown in the global economy and the debt crisis in the property sector.

• The Chinese government’s cut in deposit rates is one of the factors that helped boost economic growth, and the other measures also include tax cuts, increased government spending, and monetary easing.

• The Chinese government’s cut in deposit rates is one of the factors that helped boost economic growth, and the other measures also include tax cuts, increased government spending, and monetary easing.

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• Inflation increases as more money becomes available in the economy, and the Chinese currency, the Yuan, weakens as investors sell the Yuan in order to buy assets in other countries. The lower profits for the banks and the cheaper borrowing costs for businesses and individuals can stimulate spending and investments.

• The People’s Bank of China (PBOC), the central bank of China, cut the benchmark of the one-year deposit rate by 0.25 percentage points to 2.85%.

The Chinese government is cutting bank deposits effective September 6, 2023, and the PBOC said that the cut is intended to maintain reasonable liquidity in the banking system and support the real economy. The bank deposit cuts are the third time in the year that the PBOC has cut the deposit rates, and the previous cuts in the deposit rates were made in the months of January and April 2023.