Chinese characters reading "reserve requirement ratio (RRR)" are seen on a newspaper in Qionghai, south China's Hainan Province, Nov. 15, 2010.
BEIJING, April 14 (Xinhua) -- China will further step up financial supports to boost the real economy, in particular the industries, middle-, small- and micro-sized enterprises and individually-owned businesses hit hard by the epidemic, and lower financing costs for businesses, according to the State Council's Executive Meeting on Wednesday.
On the meeting, Chinese policy makers decided to encourage large banks with relatively high levels of provisions to reduce in an orderly manner their provision coverage ratios and adopt at the appropriate time monetary policy vehicles such as the required reserve ratio (RRR) cut to enhance banks' credit supply capacity.
Many industry insiders believed that the RRR cut mentioned on the State Council meeting meant a highly likely advent of the RRR cut in near future.
Since March, China has been facing unexpectedly complicated internal and external environment and some industries and companies still have large operating pressures, reported Beijing Business Today citing Zhou Maohua, a researcher with the financial market department of China Everbright Bank on Thursday.
Under such circumstances, the more active economic fundamental-enhancing policies can help offset the economic growth pressures and ensure economic running in a reasonable range, according to Zhou.
An RRR cut by the Chinese central bank will provide financial institutions with low-cost and stable long-term obligations to expand their credit supply capacity. For one thing, the move can help reduce comprehensive corporate financing costs and for another, it will channel more long-term credit support from financial institutions to producers in manufacturing and other industries, said Zhou.
Wen Bin, chief researcher of China Minsheng Banking Co., Ltd. reckoned that cutting the RRR at the suitable time is good to stabilize market expectations, strengthen market confidence, and improve and enlarge total demand, which will create positive conditions to stabilize the macro economy and sustain reasonable economic growth. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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