SHANGHAI — As China prepares to welcome the Year of the Monkey next week, the country’s central bank has pumped more than 1.5 trillion yuan, or about $233 million, of liquidity into the financial system.
The People’s Bank of China has repeatedly used short- and medium-term lending tools to avoid a cash crunch ahead of the weeklong Lunar New Year Holidays, which this year will see many of the country’s workers off from February 7 to 14.
Ma Jun, the PBOC’s chief economist, was quoted in state media last month saying liquidity injections ahead of the holidays could “imply a substitute for a cut in banks’ reserve requirement ratios.”
A statement released by the bank on Monday showed the PBOC lent 862.5 billion yuan, or $131 billion, to financial institutions in January via its medium-term lending facility. At the same time, the bank injected a total of 520.9 billion yuan, or $79 billion, via the standing lending facility, and disbursed 143.5 billion yuan, or $22 billion, worth of pledged supplementary loans, or PSL, to policy banks.
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Retail staff and shoppers in Shanghai’s premier shopping street Nanjing Road were upbeat ahead of the holiday, in spite of an economic environment abuzz with rumors of lower-than-usual annual bonuses and job cuts expected over many industries.
“If there is a time that people will spend money, it’s New Year,” said a shop assistant at Lao Feng Xiang Jewelery. “The people coming here to shop are normally people from all over China who come to visit Shanghai and like to shop when they are traveling.”
This may mean a leaner period for retailers who rely on traveling consumers since first-tier cities such as Shanghai and Beijing often largely empty out over the Lunar New Year holiday, as “wai di ren,” or those who move to cities to work, head back to their hometowns for the week. At the same time, the urbane upper-middle class population native to Shanghai and Beijing are increasingly likely to be spending their holidays overseas.
“I’m not planning to buy anything special,” said Charlie Qian, a twentysomething who works in sales and was born and bred in Shanghai. “Mainly I will be at home with my parents and grandmother and we will be eating and hanging out. Maybe I will go shopping if that gets boring.”
Retail sales in China have been a rare bright spot as the country’s economy begins a painful shift from savings and investment to domestic consumption as the major driving force. In December, retail sales growth was down slightly to 11 percent on the year, from a growth rate of 11.2 percent in November.
The Chinese economy’s growth reached only 6.9 percent last year, its slowest rate in 25 years, with manufacturing, heavy industry and real estate investment all slowing.