China's central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to the world's second-biggest economy to help spur bank lending and combat slowing growth.
Global stimulus is swelling, with China cutting interest rates ahead of disappointing factory data and the European Central Bank set to start government bond purchases just as data hints the euro zone economy may be picking up.
Hours after China's central bank cut interest rates to battle slowing growth and rising deflationary risk, an official survey showed on Sunday that activity in China's factory sector contracted for a second straight month in February.
China's economic growth may be as high as 7.3 percent this year, partly due to falling commodity prices, the official Xinhua news agency quoted an academic advisor to the central bank's monetary policy committee as saying on Saturday.
The People's Bank of China (PBOC) has stepped up its investments in Italy by buying 2 percent of power grid operator Terna, the latest in a series of such purchases in large Italian companies.
China announced fresh support measures on Friday for its slowing economy after data showed a worrying drop in bank lending and foreign investment growth falling to a two-year low.
The People's Bank of China will continue to maintain "prudent" monetary policy in 2015, keeping credit growth stable while having its hands free to fine-tune policy when necessary, the regulator said in an online statement on Friday.
China's annual consumer inflation hovered at a near five-year low of 1.5 percent in December, signaling persistent weakness in the economy but giving policymakers more room to ease policy to support growth.
China's annual economic growth likely slowed to 7.2 percent in the fourth quarter, the weakest since the depths of the global crisis, a Reuters poll showed, which would keep pressure on policymakers to head off a sharper slowdown this year.
China has told its banks to issue more loans in the final months of 2014 and has relaxed limits on their loan-to-deposit ratios to help hit a record new lending target as the government steps up efforts to lift flagging economic growth.
Growth in China's manufacturing sector slowed in November, suggesting the world's second-largest economy is still losing momentum and adding pressure on authorities to ramp up stimulus measures after unexpectedly cutting interest rates last month.
The central banks are finding it difficult to boost growth by increasing domestic demand and hence the need to depend upon foreign demand. The progressive rate cuts and monetary easing measures have led to massive falls in these currencies thereby helping these countries to increase exports.
China's central bank lowered the yield for a key short-term money rate on Tuesday, the fourth time it has done so this year, as regulators step up efforts to reduce funding pressure for Chinese companies.
Recently released Chinese data suggest a grim economic outlook for the country. Foreign direct investment has been consistently declining; consumer price index showed some stability this month but remained below 2 percent, flash manufacturing PMI also declined in November and gross domestic product fell to its slowest pace since the global financial crisis, registering 7.3 percent year-on-year expansion in the third quarter.
A sudden swell in China's exports of gold and jewelry may signal a resurgence of speculative currency inflows through inflated trade receipts, raising the prospect the central bank could again act to weaken the yuan and punish speculators.
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