China Lending Rates Unchanged Amid Fed Cut
- China's economy has achieved its annual growth target of approximately 5%, signaling a potential turning point in the nation's economic strategy.
- for months, China has grappled with deflationary pressures and concerns about debt levels.
- hong Hao, managing partner and CIO at Lotus Asset Management, articulated this change, stating that beijing is now prioritizing growth stimulation over strict risk management.
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China’s Economy Meets Growth Target Amid Policy shift
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Published September 22,2025,at 02:29:20 AM EDT. Updated as needed.
China’s economy has achieved its annual growth target of approximately 5%, signaling a potential turning point in the nation’s economic strategy. This comes as Beijing transitions its focus from managing risks to actively stimulating growth, and from tolerating deflation to pursuing reflation.
The People’s Bank of China (PBOC) building in Beijing, China.
Vcg | Visual China group | Getty Images
Policy Shift and Economic Reflation
for months, China has grappled with deflationary pressures and concerns about debt levels. Though, recent indicators suggest a deliberate move towards economic reflation – a policy aimed at boosting demand and prices.This shift is evidenced by the People’s Bank of China (PBOC) maintaining its benchmark lending rates despite a recent interest rate cut by the U.S. Federal Reserve. On Monday, the PBOC kept the one-year loan prime rate at 3.0% and the five-year rate at 3.5%
according to the PBOC.
hong Hao, managing partner and CIO at Lotus Asset Management, articulated this change, stating that beijing is now prioritizing growth stimulation over strict risk management. This represents a important departure from previous policies focused on deleveraging and financial stability.
addressing Inefficient investment
While stimulating growth, policymakers also recognize the need to address structural issues within the Chinese economy. Hong Hao emphasized the necessity of halting ”inefficient, debt-fueled asset accumulation” and reducing unproductive investments. This suggests a focus on directing capital towards more enduring and productive sectors.
This pivot is crucial, as years of rapid growth have been accompanied by concerns about misallocation of capital and rising debt levels. Reducing unproductive investments could free up resources for innovation, technological advancement, and more equitable distribution of wealth.
Anticipated Policy Stimulus
Experts anticipate further policy stimulus measures in the coming months to support the economic recovery. These measures could include targeted tax cuts, infrastructure spending, and easing of restrictions on certain sectors. The specific nature of these policies will likely depend on evolving economic conditions and the government’s assessment of risks and opportunities.