Recently Chinese Premier Li Keqiang announced that he would apply cutting banks’ “​​reserve requirement ratio” (RRR) measure “to ensure stable and healthy economic operations.”

Li Keqiang held a video conference with International Monetary Fund chief Kristalina Georgieva in Zhongnanhai. According to Li, in order to ensure the smooth operation of the economy, China would cut down on the reserve requirement ratios in a timely way to increase support for the real economy, especially small and micro firms.

According to expert analysis, China’s economic figures continued to fall sharply. This move by the authorities showed that they were worried about the economic downturn. Timely cutting RRR is a means to protect the economy under pressure. By cutting RRR, the government would provide more loans for the market as a means of leverage to boost economic development.

Zhang Zhiwei, the chief economist with Shanghai-based investment firm Pinpoint Asset Management, said, “Relying on RRR cuts alone cannot reverse the economic downturn. The future of the economic cycle depends on the support of fiscal policies and whether the real estate policy will be fine-tuned,”
Li Keqiang, who is in charge of the country’s economy, has issued several early warnings recently. He stated at the entrepreneurs’ forum on Nov. 19 that the current operation of China’s economy was facing many challenges, and the promotion of the economy had to be like “climbing the hurdle.”

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