Analysis-China needs more than cheaper mortgages to revive spending
© Reuters. A person works at a residential building construction site in Beijing, China September 6, 2023. REUTERS/Tingshu Wang
"The rate cuts have little impact on my spending power," said Yu, who works for an asset management firm, pointing to one of the government's stated aims for those measures. Analysts at Nomura estimate the mortgage rate cuts could save borrowers 200-300 billion yuan a year. But they also warn that a 15 basis point cut in interest rates on Chinese households' 131.4 trillion yuan of deposits reduces interest income by 197 billion per year."It's more of a redistribution of income," said Ting Lu, chief China economist at Nomura, adding it had"limited" impact on consumption.
Li Xiao, a data analyst in Shanghai, says he will keep the money in the bank despite being unhappy with the lower rates.
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