Coronavirus: China joins US, Europe in moves to calm markets as economic anxiety grows

The People’s Bank of China that it would pump 550 billion yuan (US$78 billion) into its banking system to spur additional lending to factories and households

European and US stock markets rebounded as Beijing signalled willingness to head off risk of global recession

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The People’s Bank of China said on Friday it pump an extra US$78 billion into the banking system. Photo: Reuters

Zhou Xin,John Carter,Stuart Lau,Orange WangandSidney Leng

Published: 6:27pm, 13 Mar 2020Updated: 10:16am, 16 Mar 2020

China’s central bank on Friday joined its US and European counterparts in seeking to calm global financial markets and ease economic anxiety about the impact of coronavirus, helping to engineer a rebound in stock prices.

The People’s Bank of China (PBOC) announced on Friday that it would pump 550 billion yuan (US$78 billion) into its banking system on Monday to spur additional lending to factories and households.

While Beijing’s move was not as big as those of Western central banks, it sent the signal that the Chinese government would not sit idly by while the risks of a global economic recession grew.

Chinese Premier Li Keqiang said on Friday that the pandemic was bringing challenges to global economy and causing big swings in international markets, which will create a “more complicated and grim external environment” for China.

However, he said China would support its companies and exporters to “promote domestic economic growth and maintain global supply chain stability”.

China’s policy easing step came on the heels of the US Federal Reserve’s move to provide up to US$5 trillion in liquidity into the US financial system over the next month to ensure that short-term interest rates did not rise.

The US Federal Reserve is also expected to slash its main interest rate to near zero next week on top of its emergency half-point cut last week.