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Beijing Concerned Funds From Liquidity Boosts Aren't Finding Borrowers

·1 min

China’s policymakers are concerned about excessive liquidity in the banking system due to intensified monetary policy support. Since last year, Chinese lenders have been flush with cash as the government cut banks’ reserve requirements and lowered lending rates to boost the economy. However, weak demand for loans means that large cash deposits are sitting idle in banks, reducing the effectiveness of growth-stimulating policies. Economists suggest that this situation is undermining efforts to revive the economy.