Photo: IC

China on Wednesday took another major step to shore up domestic growth by lowering its interest rate for the fourth time in less than three weeks, as the world's second-largest economy continues to face intensifying downward pressure.

The move, coming as trade talks with the US for an interim deal appear to be stalling given the US' lack of sincerity, highlighted China's longstanding answer to the long-running, bruising trade war Washington has waged: focusing on the domestic economy, analysts noted.

The People's Bank of China (PBC), the central bank, lowered the one-year loan prime rate (LPR) by five basis points (bps) to 4.15 percent and the five-year LPR by five bps to 4.8 percent. 

The LPR has become a benchmark for bank loan rates. Wednesday's move marked the fourth cuts the PBC has made since November 5. The central bank has also cut the medium-term lending facility in recent days, another tool to bolster liquidity.

The moves are intended to add liquidity to stimulate economic growth, said Lian Ping, chief economist at the Bank of Communications. The move "brings significant benefits to companies, as borrowing costs will be lowered further," he told the Global Times on Wednesday, adding that financial markets could get new boost from the decision.

At a meeting on Tuesday presided over by PBC Governor Yi Gang, policymakers determined that though positive signs have emerged for various sectors, there are still challenges for the stability of the economy and financial market and downward pressure continues to intensify, according to a statement issued by the PBC.

The Chinese economy grew by 6.2 percent year-on-year in the first nine months of 2019. Though areas such as consumption remain robust, some sectors - most notably manufacturing - have been under heavy pressure due to the trade war.

The PBC's move on Wednesday also signaled that China will continue to focus on stabilizing the domestic economy, while firmly pushing back against economic aggression by the US, which could last for years despite ongoing talks to defuse tensions, analysts noted. 

"Regardless of what dirty tricks the US wants to play, China will be able to fight back if the domestic economy is stable and resilient," Huo Jianguo, a vice chairman of the China Society for World Trade Organization Studies, told the Global Times on Wednesday. "That's a basic consensus in the Chinese society."

On Wednesday, new threats made by US President Donald Trump to raise tariffs on Chinese goods if a deal wasn't reached fell largely on deaf ears in China, where officials are "tired of the same maximum pressure tactic," Huo said. 

"It's always the same, and they know that it would not work with China."


Newspaper headline: Beijing moves to shore up domestic growth