On 7 May, the People’s Bank of China, the central bank of the country, announced its latest raft of stimulus, 10 measures in 3 categories. The measures include cutting the benchmark 7-day interest rate by 0.1 percentage point, from 1.5% to 1.4%, as well as reducing the reserve requirement ratio (RRR), the amount of cash banks must hold in reserve, by 0.5 percentage point. This will result in 1 trillion RMB (138.40 billion) being injected into circulation.
In response to the stimulus, over 3,000 stocks surged in the RMB A-share markets. Shanghai’s SSE Composite Index was up 0.8% at closing, while Shenzhen’s SZSE Component Index was up 0.22%.
- #央行宣布降准降息 Central bank announces rate and RRR cut: 380 million views on Weibo, ranking number 1 on the Hot Search list, 4.58 million views on Rednote, ranking number 2 on the Hot Topic list
- #A股三大指数集体高开 all three indices of A-share open high: 3.61 million views on Rednote, ranking number 9 on the Hot Topic list
Most netizens are discussing whether the stimulus would affect mortgages or just the Housing Provident Fund. Others seem to believe it’s to boost the consumer market. Much of the discussion is directed at the effect the stimulus has had on the stock market. Global pundits are mostly interpreting it as a move to shore up against tariffs from the Trump administration, especially ahead of the “ice-breaker trade talks” this weekend in Geneva.
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