China Gooses Its Economy With Cash

The cash injection into China’s economy made this week by the Peoples’ Bank of China, is the largest since early this year. It follows the weakest month for bank lending in a year. The sum involved: 278 billion yuan ($43.8 billion).

The central bank has chosen this way to boost the banking system’s liquidity over a cut in the bank’s capital reserve ratios. That suggests to this Bystander that policymakers have concerns about restoking inflation, even as the latest flash purchasing managers index signals no let up in the slowing of the economy. Their inflation concerns are likely to have become more acute with the uptick in property prices, which have risen in the past two months on a month-on-month basis, reversing eight months of policy-driven declines, and with five consecutive weeks of higher farm produce prices, a rise that only seems likely to continue.

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