China cuts Interest Rates, America vs China some reality check by me

[senheiser]

China Cuts Interest Rates
China Interest Rate | 1996-2014 | Data | Chart | Calendar | Forecast | News

The People´s Bank of China decided to cut its benchmark one-year lending rate by 40 bps to 5.6 percent on November 21st. It is the first rate cut in more than two years as the economy slows.

The one-year lending rate was cut by 40 bps to 5.6 percent and the one-year deposit rate by 25 bps to 2.75 percent, effective November 22nd. Policymakers also decided to increase ceiling for deposit rates to 1.2 times the benchmark rate from the previous 1.1 times.

China’s central bank last cut the benchmark interest rate by 31 bps in July of 2012.

Joana Taborda | joana.taborda@tradingeconomics.com
11/21/2014 11:22:19 AM

====
here some reality check to the China slowing propaganda by the US media like bloomberg which was silent this to this news over the weekend

China vs America

Interests Rates

Inflation

Growth

There is no deny China has a lot of growth reserves with their high interests rates while american economy runs at full speed with their printing press and yet still gets outgrown by china, 3 times. Chinese inflation is now lower than americas while the economy is still growing 7+ %. American savers are pretty much forced to spend their money with a 1.7% inflation rate vs 0.25% interests meanwhile china gives its savers 4% extra money for saving. Will be funny to see what will happen when the Fed stops QE if they ever plan to.

@Nihonjin1051 @gambit @boomslang @mike2000 @Schutz @TaiShang @ChineseTiger1986 @Chinese-Dragon @Peter C @nvKyleBrown @LeveragedBuyout @TimeTraveller @Raphael @Viet @Götterdämmerung

 

[Chinese-Dragon]

America's interest rates have been pretty much zero for the past few years.

That's why they went for Quantitative Easing, since they could not lower the interest rate below zero in order to boost growth.

Their interest rates have been around zero since 2008, that's a long time.


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[TaiShang]

Markets welcome interest rate cut - Global Times

Markets have welcomed the central bank's latest interest rate cut, a move analysts said Sunday will help to stabilize economic growth in several areas, such as boosting home sales and reducing financing costs for businesses.

The People's Bank of China (PBC) cut the one-year benchmark lending rate by 40 basis points to 5.6 percent on Friday, and lowered the one-year benchmark deposit rate by 25 basis points to 2.75 percent. The interest rate cut was to take effect from Saturday, the PBC said in a statement Friday.

"The lending rate cut will bolster the property market in the short term," Zhang Hongwei, research director at Shanghai-based property consultancy ToSpur, told the Global Times via e-mail Sunday.

Zhang said home sales are likely to rebound in the next few months, because the reduced cost of housing loans will attract more homebuyers.

Jia Ningfang, a 30-year-old white-collar worker, who is planning to buy an apartment in Beijing with a budget of around 3 million yuan ($489,000), said the rate cut will help by reducing her borrowing costs.

Jia plans to buy an apartment with a 20-year adjustable-rate mortgage from a commercial bank for a total loan of 1 million yuan in January.

"The monthly mortgage payments for me will be about 230 yuan less than the amount before the interest rate cut," Jia said.

The interest rate on loans of more than five years for people who purchase apartments by using the public housing provident fund will be reduced by 0.25 percentage points to 4.25 percent, the Beijing housing provident fund management center said Saturday.

Despite the stimulus measures and the short-term boost for the property market, in the long term the issue of oversupply in the market, especially in second- and third-tier cities, "will still be a factor," said Zhang of ToSpur.

In addition to the property sector, "the stock market will benefit from the central bank's move," Li Daxiao, director of research with Shenzhen-based Yingda Securities Co, told the Global Times Sunday.

The move will also help "to ease the downward pressure on the economy, and reduce financing costs for firms," Liu Dongliang, a senior analyst at China Merchants Bank, told the Global Times via e-mail Sunday.

China has set a 7.5 percent growth target for the year, but the country's top leaders have also stressed publicly that they could tolerate slower growth as long as the job market is stable.

The country's GDP grew by 7.3 percent year-on-year in the third quarter, the weakest pace of growth in more than five years, official data showed.

In addition to the interest rate cut, the PBC said it would allow banks to pay depositors a maximum of 1.2 times the benchmark rate, up from the previous ceiling of 1.1 times, a move Liu said was part of the effort to offer more market-oriented interest rates.

To attract deposits, Chinese commercial banks on Saturday started to adjust their deposit and lending rates, according to analysis of their statements and announcements by the Xinhua News Agency.

Some mid-sized banks including Industrial Bank, China Minsheng Bank and Shanghai Pudong Development Bank offered deposit rates of 3.025 percent, about 1.1 times the benchmark rate of 2.75 percent.

Deposit rates at smaller banks like Bank of Ningbo and Bank of Nanjing, which have fewer branches but face bigger pressure to attract deposits, are even higher at 3.3 percent, 1.2 times the benchmark, according to Xinhua.

Meanwhile, deposit rates at the nation's five biggest State-owned banks - Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Bank of Communications - are 3 percent, around 1.09 times the benchmark rate.

Although Chinese banks are expected to face shrinking net interest margins in the wake of the central bank's latest rate cut, they are still likely to benefit from the move in the long run, Wang Tao, head of China Economic Research at UBS Securities, said in a research note e-mailed to the Global Times late Friday.

"Interest rate cuts will reduce the debt servicing burden and improve corporate cash flow and balance sheets, which should help to slow the formation of nonperforming loans and reduce overall financial risk," Wang explained.

 

[cirr]

Inflation rather subdued with high interest rates and bank reserve ratios，

Growing government revenues。

The Chinese government has much leeway in fiscal and monetary policies。

 

[TimeTraveller]

China Cuts Interest Rates
China Interest Rate | 1996-2014 | Data | Chart | Calendar | Forecast | News

The People´s Bank of China decided to cut its benchmark one-year lending rate by 40 bps to 5.6 percent on November 21st. It is the first rate cut in more than two years as the economy slows.

The one-year lending rate was cut by 40 bps to 5.6 percent and the one-year deposit rate by 25 bps to 2.75 percent, effective November 22nd. Policymakers also decided to increase ceiling for deposit rates to 1.2 times the benchmark rate from the previous 1.1 times.

China’s central bank last cut the benchmark interest rate by 31 bps in July of 2012.

Joana Taborda | joana.taborda@tradingeconomics.com
11/21/2014 11:22:19 AM

====
here some reality check to the China slowing propaganda by the US media like bloomberg which was silent this to this news over the weekend

China vs America

Interests Rates
View attachment 155972
View attachment 155973

Inflation
View attachment 155974
View attachment 155975

Growth
View attachment 155976
View attachment 155977

There is no deny China has a lot of growth reserves with their high interests rates while american economy runs at full speed with their printing press and yet still gets outgrown by china, 3 times. Chinese inflation is now lower than americas while the economy is still growing 7+ %. American savers are pretty much forced to spend their money with a 1.7% inflation rate vs 0.25% interests meanwhile china gives its savers 4% extra money for saving. Will be funny to see what will happen when the Fed stops QE if they ever plan to.

@Nihonjin1051 @gambit @boomslang @mike2000 @Schutz @TaiShang @ChineseTiger1986 @Chinese-Dragon @Peter C @nvKyleBrown @LeveragedBuyout @TimeTraveller @Raphael @Viet @Götterdämmerung

Thanks Sir for tagging....China is surely an emerging power and will definitely outsource America....

 

[The Great One]

China Cuts Interest Rates
China Interest Rate | 1996-2014 | Data | Chart | Calendar | Forecast | News

The People´s Bank of China decided to cut its benchmark one-year lending rate by 40 bps to 5.6 percent on November 21st. It is the first rate cut in more than two years as the economy slows.

The one-year lending rate was cut by 40 bps to 5.6 percent and the one-year deposit rate by 25 bps to 2.75 percent, effective November 22nd. Policymakers also decided to increase ceiling for deposit rates to 1.2 times the benchmark rate from the previous 1.1 times.

China’s central bank last cut the benchmark interest rate by 31 bps in July of 2012.

Joana Taborda | joana.taborda@tradingeconomics.com
11/21/2014 11:22:19 AM

====
here some reality check to the China slowing propaganda by the US media like bloomberg which was silent this to this news over the weekend

China vs America

Interests Rates
View attachment 155972
View attachment 155973

Inflation
View attachment 155974
View attachment 155975

Growth
View attachment 155976
View attachment 155977

There is no deny China has a lot of growth reserves with their high interests rates while american economy runs at full speed with their printing press and yet still gets outgrown by china, 3 times. Chinese inflation is now lower than americas while the economy is still growing 7+ %. American savers are pretty much forced to spend their money with a 1.7% inflation rate vs 0.25% interests meanwhile china gives its savers 4% extra money for saving. Will be funny to see what will happen when the Fed stops QE if they ever plan to.

@Nihonjin1051 @gambit @boomslang @mike2000 @Schutz @TaiShang @ChineseTiger1986 @Chinese-Dragon @Peter C @nvKyleBrown @LeveragedBuyout @TimeTraveller @Raphael @Viet @Götterdämmerung

So?
China is a developing economy with a much lower income base than America. It has hundreds of millions of poor and lower middle class people able to fuel their industrial growth with cheap labor, therefore a much larger population which is upwardly mobile and hence a growing and much larger market. Any comparison between American and Chinese economies is frivolous at best.
And as your own data shows -- China is slowing down, hence the interest rate cut.

 

[TaiShang]

China stocks open higher after central bank's rate cut

Chinese stocks opened higher on Monday morning after the country's central bank unexpectedly cut interest rates during the weekend to boost national economy.

The benchmark Shanghai Composite Index was up 0.75 percent, or 18.74 points to open at 2,505.53 points. The Shenzhen Component Index opened at 8,498.06 points, up 1.99 percent, or 165.76 points.

China cut the benchmark interest rates for the first time in more than two years as policy makers stepped up supports for the world's second-largest economy.

The one-year lending rate was reduced by 40 basis points to 5.6 percent, while the one-year deposit rate was lowered by 25 basis points to 2.75 percent, the People's Bank of China said on Friday.

Brokerage and property developers led the gains. As of 10:00 a.m., Gf Securities soared by the daily limit of 10 percent to 14.82 yuan (2.41 U.S. dollars). China Vanke, the country's biggest property developer by market vale, surged 4.7 percent to 9.81 yuan, while Poly Real Estate, the second largest, advanced 6.63 percent to 6.27 yuan.

 

[StarCraft_ZT]

Asia stocks jump as China, Europe step up stimulus | Reuters