Beijing beats expectations to hold interest rates
The People’s Bank of China (PBOC) kept Chinese policy rates unchanged on Wednesday, despite analysts’ expectations for a rate cut and wants the central bank to take a much worse stance in hopes of further easing monetary policy.
The central bank also decided to keep the base interest rate for one-year advance loans at 3.7% and for five-year advance loans at 4.6%. Although the central bank last week left the medium-term lending facility unchanged for a year, analysts expected the bank to announce an interest rate cut yesterday.
The interest rate on primary loans for the last year was cut by 5 basis points last January, the second in a row.
Although the central bank has the power to set interest rates, interest rates on initial loans would be determined monthly based on applications submitted by 18 banks to the Central Bank of China. In August 2019, this method was used to set interest rates in China as an alternative to the traditional mechanism.
In a separate story, China’s parliament on Wednesday ratified international agreements banning forced labor amid accusations it was seeking forced labor in the country’s northwest Muslim-majority province of Xinjiang.
One of the conditions imposed by the European Union to ratify the bilateral agreement on investment, signed at the end of 2020, is the ratification of these agreements by the International Labor Organization.
The Standing Committee of the National People’s Congress (acting as parliament in China) approved the Compulsory Labor Agreements of 1930 and the Abolition of the Compulsory Labor Agreements of 1957, which Parliament announced at the end of a meeting of three days.
The move comes at a time when the International Labor Organization (ILO) panel of experts has expressed “serious concern” about the treatment of ethnic and religious minorities in China, particularly in the Xinjiang region.
According to human rights organizations, at least a million Uyghur people and other Muslim minorities are being held in camps in the northwest region of China. Beijing, for its part, says the vocational training centers aim to keep them away from terrorism and extremism.
The issue has alarmed the international community. In December 2021, the United States, accusing China of genocide against the Uyghurs, enacted a law prohibiting the purchase of forced labor by these minorities. Beijing vehemently denies these allegations.