China economy: China cuts key rate, doubles EV subsidies

China ratcheted up its effort to reinvigorate its slowing economy Thursday by unexpectedly cutting a key policy rate and also doubling subsidies for electric vehicles bought to replace older cars. The People’s Bank of China said it cut its lending rate for one-year medium term policy loans by 20 basis points to 2.3%. That is the biggest rate cut since the world’s second-largest economy was slammed by the Covid-19 pandemic in 2020.

The rate on 7-day loans was reduced to 1.7%.

Major state-run banks cut deposit rates, meanwhile, to relieve pressure on their finances, reducing the rate paid on one-year fixed deposits by 10 basis points to 1.35%, the official Xinhua News Agency reported, citing official rates released Thursday by the country’s “Big Four” banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank.

The banks cut deposit rates three times last year and this was the first for 2024, it said.

Meanwhile, the country disclosed for the first time it’s earmarking $41 billion for an initiative to give a makeover to the country’s stock of industrial and household equipment.As part of one of this year’s main stimulus programs designed to lift consumer spending, the central government will use funds raised by selling ultra-long special sovereign bonds this year for the overhaul, according to a document released Thursday. Agencies