China's central bank announces policy easing as it seeks to boost growth

BEIJING — China pledged to reduce the amount of liquidity that its banks are required to hold as reserves early next month in a bid to boost its struggling economy.

Reserve ratio requirements for banks will be cut by 50 basis points from Feb. 5, which will provide 1 trillion yuan ($139.8 billion) in long-term capital, Pan Gongsheng, the People's Bank of China governor, said at a press conference in Beijing Wednesday.

This is the first reduction in reserve requirements this year, after two cuts last year. The PBOC also said Wednesday there's room for further monetary policy easing. Reducing the reserve requirements that banks must maintain will increase the capacity for lenders to extend loans and spur spending in the broader economy.

Pan also told reporters the central bank and the National Financial Regulatory Administration have been working on new policy to support loans for high-quality real estate developers — and that details would be released later Wednesday or Thursday.

He did not elaborate further on real estate issues, but said local government debt problems were mostly in underdeveloped regions, "which has limited impact on the economy and finance in aggregate.” That's according to a CNBC translation of the Chinese comments.

China's real estate troubles are closely intertwined with local government finances since they typically relied on land sales to developers for a significant portion of revenue. The property market has slumped after Beijing cracked down on developers' high reliance on debt for growth in 2020.

Stocks in Hong Kong and China extended gains in the last hour of trade, while yields on China's 10-year government bonds crept marginally lower after the news. China vowed Monday to "strengthen the market's