China has always been known as a hub where cheap, yet quality goods are produced. From gadgets, technology, clothing, furniture, and many more, the country has successfully cemented itself as a force to be reckoned with. However, following the unstable footing of their economy, China looks to buy products rather than produce these, allowing banks to provide money for lending.
According to Kevin Yao and Lusha Zhang of Reuters, the Central Bank of China has drastically cut down the number of cash reserves stored in banks, the fifth time within one year. The cut down brings the total amount of money freed to $116 billion.
State of the Economy
Last January 2019, the country saw a drop in its economy, with a slew of global stock markets being sold off following Apple Inc.’s announcement that its iPhone sales have not been picking up, reports Gabriel Wildau of the Financial Times. In addition, with not enough demand from the public, the manufacturing industry in the country has taken a toll as well.
Extreme Cuts in Order to Gain Stable Footing
Reuters reports that the cuts stemmed from China’s degrading economy, caused by slow demand for production at their home front as well as high export tariffs posed by the United States of America.
In light of these unfortunate events surrounding the country, China has been doubling its efforts to find more stable ground. Some of their initiatives include retaining their benchmark lending and deposit rates as well as more cuts in taxes and fees to stabilize the state of the economy.
The freed-up cash is slated to help small, privately own businesses who have suffered from the slowdown.