At last, China pulls the trigger on a bold stimulus package

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Subscribe to enjoy similar stories. Two gut instincts have distinguished the macroeconomic policies of Xi Jinping, China’s ruler since 2012. He has disdained consumer handouts, which he thinks breed laziness.

And he has refrained from bold economic stimulus, the kind of fiscal and monetary “bazooka" that China’s previous leaders fired in November 2008 during the global financial crisis. Both of Mr Xi’s convictions have been tested by China’s economic woes over the past year. And this week, shortly before the 75th anniversary of the People’s Republic of China, he appears to have set his qualms aside, permitting China’s most attention-grabbing stimulus since 2008.

Chinese stocks posted their best week in 16 years; Hong Kong’s surged at a pace unseen since 1998. Some analysts have even used the b-word. On September 24th the People’s Bank of China (PBoC), the country’s central bank, cut interest rates, lowered banks’ reserve requirements and took steps to reduce the cost of existing mortgages.

That would save 50m households about 150bn yuan ($21bn) a year, it said. Further easing of reserve requirements was possible this year, added Pan Gongsheng, the central bank’s governor. More surprising were two new tools to boost the stockmarket.

The central bank will help firms buy back their own shares by refinancing bank loans used for that purpose. And it will help securities companies, insurers and other institutional investors raise funds by making their balance-sheets more robust. They will be able to borrow safe, liquid assets like government bonds from the PBoC, using their riskier, less liquid assets, such as stocks, as collateral.