Chinese banks have been instructed by the government to lend more loans to entrepreneurs to support economic growth amid an escalating trade dispute with Washington. The People’s Bank of China is giving 750 billion CNY (109 billion USD) for additional lending by lowering the required bank reserves with 1%. The institution specified that the money is intended for small enterprises.
The new measure covers large commercial banks, as well as financial institutions with foreign capital.
The Asian Development Bank predicts that the Chinese economy will grow at an annual rate of 6.6% this year and will slow to 6.3% next year.
The growing trade war with the United States has been the most visible threat. In September, the United States imposed tariffs on 200 billion USD in goods from China. Trump has shown little inclination to back off, and relations between the two countries have cooled, suggesting the trade war could worsen.
So far, it has had only a minor effect on China’s 12 trillion economy USD. Trade is not as important to China as it once was, thanks in part to the rise of a middle class that has been a ready buyer of Chinese goods at home.