Chinese central bank to pump $173bn to economy in virus boost

The bank said they would launch the reverse repurchase operation on Monday to maintain reasonable and abundant liquidity. (File/AFP)
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Updated 02 February 2020

Chinese central bank to pump $173bn to economy in virus boost

  • Overall liquidity of the banking system would be $129 billion more than in the same period last year
  • The move will kick in on the day that China’s financial markets reopen, following an extended Spring Festival break

BEIJING: China’s central bank said Sunday it would pump $173 bn into the economy as it ramps up support for a nationwide fight against a deadly virus that is expected to hit growth.

The People’s Bank of China (PBOC) said in a statement it would launch a $173 bn reverse repurchase operation on Monday to maintain “reasonable and abundant liquidity” in the banking system, as well as a stable currency market, during the epidemic.

It added that the overall liquidity of the banking system would be $129 billion more than in the same period last year.

The move will kick in on the day that China’s financial markets reopen, following an extended Spring Festival break.

The SARS-like virus which originated from the central Chinese city of Wuhan, has now infected over 14,000 people in the country and claimed more than 300 lives.

The PBOC also announced measures Saturday to step up monetary and credit support for enterprises which are helping in its fight against the virus, such as medical companies.

China’s central bank urged financial institutions to provide “sufficient credit resources” to hospitals and medical research units, among other measures.

Authorities also relaxed tariffs on goods imported for use in the virus fight — including those from the United States, with which it has been engaged in a bruising trade war for around two years.

The move to inject liquidity into its financial system comes as authorities work to shore up confidence in an already slowing economy.

The China Securities Regulatory Commission said Sunday that “the epidemic’s impact on the market is short-term, and will not affect the longer-term trend,” reported the state-run People’s Daily.

But China’s travel and tourism sectors have already taken a hit over an unusually quiet Spring Festival break this year, with large-scale events canceled, public attractions closed and people urged to stay home to help contain the outbreak.

China has advised its citizens to postpone trips abroad and canceled both overseas and domestic group tours.

Cinemas were made to close during what would otherwise have been a prime time for blockbuster releases.

Other countries have told their nationals to avoid travel to the country as well, with various airlines trimming their schedules.

Manufacturing has also been halted Taiwanese tech giant Foxconn is keeping its factories in China closed until mid-February, allowing more local employees to delay their return after the new year break.

Toyota, IKEA, Starbucks, Tesla, McDonald’s and Volkswagen are among corporate giants temporarily halting production or shuttering outlets in China.

Tech giant Tencent was among companies telling staff to work at home until February 10.

China saw economic growth of 6.1 percent last year, the slowest in around three decades.

Analysts warn that this could weaken further if the spread of the mysterious pathogen goes on for an extended period.

Analysts at S&P said consumption contributed about 3.5 percentage points of China’s growth rate in 2019.

Even a 10 percent drop in consumption would knock about 1.2 percentage points off GDP, they warned.


MoU signed to facilitate investment in Saudi Arabia

Updated 21 February 2020

MoU signed to facilitate investment in Saudi Arabia

RIYADH: The Saudi Arabian General Investment Authority (SAGIA) and the Diriyah Gate Development Authority (DGDA) signed a memorandum of understanding (MoU) to step up cooperation, the Saudi Press Agency reported on Thursday.

Under the MoU, the two authorities will establish a joint working group to boost cooperation in several areas including facilitation provided to investors, conducting economic studies of the market, building partnerships with commercial and industrial bodies and local companies, launching businesses, promoting the ease of doing business, providing logistic support, participating in local and international exhibitions, forums and special visits and exchanging knowledge and information.

All this will predominantly be in aid of attracting local and foreign investors. 

“SAGIA believes in the importance of such cooperation that can unify and multiply the efforts in a way that sets the world’s attention on the Kingdom’s cultural and heritage treasures and investment opportunities,” said SAGIA Gov. Ibrahim Al-Omar.

“This is done through close cooperation with DGDA to highlight these opportunities and market them internationally and locally. This MoU is a step in the right direction to achieve the objectives and directives of both bodies.”

Jerry Inzerillo, CEO of the DGDA, said: “Cooperating with SAGIA is one of the most important international investment motors to attract local and international investments to the Kingdom. This comes at a time where developing the Kingdom’s investment infrastructure is found within the objectives of its Vision 2030.

“At DGDA, we aim at attracting the best technologies and regional and international investments to the Kingdom. This will contribute to the improvement of the local economy and promote our objectives seeking to turn Diriyah into the Kingdom’s gem and an international economic tourist destination,” he added.