China pumps $188 billion into the economy to counter real estate slump - CNN | Canada News Media
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China pumps $188 billion into the economy to counter real estate slump – CNN

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Hong Kong (CNN Business)China has decided it’s time to loosen its purse strings and pump money into the economy in a bid to stave off threats to the recovery.

The People’s Bank of China on Monday said it would cut the reserve requirement ratio for most banks by half a percentage point, starting December 15. That move, which reduces the amount of money that banks have to keep in reserve, will unleash some 1.2 trillion yuan ($188 billion) for business and household loans.
The decision — the second cut to that ratio this year — came on the same day China’s Politburo signaled that it may take more aggressive actions to protect the economy in 2022. The Chinese Communist Party’s leadership team, chaired by President Xi Jinping, said in a statement that “ensuring stability” would be a top priority in the coming year.
The statement was notable for its use of the phrase “stability is the top priority” — the first time the Politburo has used those words at its December meeting, which is dedicated to discussing the year ahead, according to Larry Hu, head of China economics for Macquarie Group.
“In other words, top leaders are deeply concerned about the risk of potential instability,” he added in a Monday research note.
Beijing has been very cautious about intervening in China’s economic recovery during the coronavirus pandemic. It hasn’t cut the country’s benchmark lending rate since early 2020, and has refrained from flooding the economy with stimulus — instead offering more targeted support to smaller businesses that have been hit by the pandemic.
The world’s second largest economy outperformed other big nations during the pandemic, and was the only major global economy to grow last year.
But China has faced a slew of challenges to growth in 2021, including a power shortage, shipping delays and a crisis in real estate. Analysts have also been worried about the effects of the country’s massive crackdown on tech firms and other private companies.
Hu noted that during the Politburo’s meeting last December, the leadership signaled that they would be tightening regulations on private businesses — policies that dominated headlines in 2022.
“This time, the Politburo meeting suggests that the priority has shifted from regulatory tightening to supporting growth,” he added.
The real estate crisis perhaps looms largest for China. Evergrande — one of the country’s largest and most indebted developers — has been teetering on the brink of default for months. On Friday, it warned that it may not have enough money to meet its financial obligations, an announcement that caused shares to plummet 20% in Hong Kong on Monday.
Analysts have long feared that Evergrande’s collapse could have ripple effects across the property sector in China, which accounts for as much as 30% of GDP.
Prior to Monday’s Politburo statement, Beijing had been pretty firm in cracking down on what it saw as excessive borrowing and unruly activity in the property sector. Xi in 2017 famously announced that “housing is for living and not for speculation” — a statement that has appears to have driven policy in China for years.
But analysts from Citi noted Tuesday that the Politburo shied away from repeating that edict this week, and instead stressed that the country will need to support “reasonable housing demand” in the future.
That, along with the central bank’s ratio cut, “sends a signal that policy will turn more accommodative on property,” they wrote in a research note.
Chinese stocks improved Tuesday after the moves. Hong Kong’s Hang Seng Index (HSI) advanced 2.7%, recovering losses after a drop of 1.8% Monday as property and tech stocks were routed. China’s Shanghai Composite (SHCOMP) closed up 0.2%.

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PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

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OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Statistics Canada says levels of food insecurity rose in 2022

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OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

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OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

The Canadian Press. All rights reserved.

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