People's Bank of China offers record 800 bn Yuan to support fragile economic recovery

China has extended support to its economy by injecting the largest amount of medium-term policy loans ever, recognizing the fragility of the nation’s growth recovery amidst a housing slump and subdued demand. The People’s Bank of China provided commercial lenders with a net 800 billion yuan ($112 billion) of one-year loans while maintaining the interest rate on the funding. This injection surpassed analysts’ expectations, being more than double the anticipated amount according to a Bloomberg survey, and also exceeded the infusion from the previous month. China’s economic challenges persist this year, as the rebound from stringent Covid Zero policies proved weaker than anticipated, and the property crisis has intensified. On Friday, the nation reported mixed data, with industrial production surpassing expectations, while retail sales fell short of estimates in November. The world’s second-largest economy is still contending from the setbacks of the COVID-19 pandemic, among other shocks, dogged by weakness in the property sector and in global demand for China’s exports, high debt levels and wavering consumer confidence. The 10.1% jump in retail sales in November from a year earlier, up from a 7.6% jump in October, showed a glimmer of hope given that sluggish consumer spending has been a key factor hindering a stronger recovery. China’s economy has yoyoed in the past few years, with growth ranging from 2.2% in 2020 to 8.4% in 2021 and 3% last year. Stringent limits on travel and other activities during the pandemic hit manufacturing and transport. Job losses due to those disruptions and to a crackdown on the technology sector, combined with a downturn in the property industry, have led many Chinese to tighten their purse strings. With inputs from AP.