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Jack Ma, one of China’s most prominent entrepreneurs, returned to China this week after traveling overseas for more than a year, in what is being interpreted as evidence of an improved climate for the nation’s private sector.

He paid a visit Monday to the Yungu School, a private academy in Hangzhou funded by Ma’s Alibaba Group, which includes one of the world’s biggest online commerce companies. There, he talked about “the future of education with the campus directors” and “the challenges and opportunities” that “new technological change brings to education,” according to the school’s WeChat account.

Earlier this month, Chinese leader Xi Jinping said the Chinese Communist Party (CCP) “has always treated private entrepreneurs as its own people,” marking an about-face from suppressing the private economy during the pandemic with tactics that included stopping what was expected to be the $37 billion IPO of Ma’s Ant Group.

China’s economy trended down after COVID-19 was first identified in humans in Wuhan in December 2019. Xi led the crackdown on some of China’s most successful entrepreneurs as he pushed for “common prosperity” — long a CCP catchphrase — as an alternative to increasing inequality.

Some see Ma’s return as a signal of a fundamental change of China policies in the private sector.

An article from Ejam Finance, a Guangzhou-based new media company focusing on financial information, said, “Today, Jack Ma returned to China again! I believe this is also a day when the confidence of private entrepreneurs across the country soars.”

Alibaba’s U.S.-listed shares rose by more than 10% after news broke of Ma’s return. Alibaba Group is planning to split into six units, it said Tuesday, as Beijing said it would ease a regulatory crackdown on private enterprises.

Zongyuan Zoe Liu, fellow for international political economy at the Council on Foreign Relations, told VOA Mandarin, “Ma Yun (Jack Ma) has been the token of Chinese entrepreneurship. His rise and fall (and seemingly rise again) have been closely associated with the Chinese government and government-led investment.”

According to Reuters, China’s new premier, Li Qiang, has been asking Ma to return since late last year, hoping it would boost business confidence among entrepreneurs, which enhanced the theory of Ma’s return being a prophecy of a policy change.

Fraser Howie, a longtime Asia analyst, is not optimistic that Ma’s return will change much.

He told Reuters, “I can see how this sort of signals a relaxation but none of the laws and institutions set up to control the private sector have changed.”

Liu said the most important aspect of Ma’s return is whether it can boost investors’ confidence in China’s economy.

“As long as confidence in the Chinese economy and confidence in the Chinese government’s support for the private sector can be quickly restored, it helps to quell rumors and reduce uncertainties. After all, economic growth is a confidence game,” she said.

She emphasized that confidence in the Chinese economy and expressing support for Ma’s return are two different things.

Hu Ping, a onetime district councilor in Beijing who later edited China Spring and Beijing Spring, both U.S.-based journals focused on Chinese politics, told VOA Mandarin that “the loss of Chinese private entrepreneurs’ confidence in the government is caused by Xi’s suppression policy.”

As long as Xi is in the office and his policies remain unchanged, people’s trust can’t be regained, Hu said.

Yao Wang, a Chinese investment expert who has been engaged in asset management in New York for nearly 30 years, believes that instead of using Ma’s return to boost confidence in private enterprise, Beijing should take some practical actions.

“The best way to show the stability, continuity, predictability, and transparency of policies is to fix it in the form of law,” he said.
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The scope of blame for Silicon Valley Bank’s failure stretches across bank executives, Federal Reserve supervisors and other regulators, the banking system’s top cop on Wednesday told U.S. lawmakers demanding answers for the lender’s swift collapse. 

“I think that any time you have a bank failure like this, bank management clearly failed, supervisors failed and our regulatory system failed,” Michael Barr, Fed Vice Chair for Supervision, told Congress. “So we’re looking at all of that.” 

The failures of SVB, and days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.

Depositors tried to pull more than $42 billion in a single day at SVB in early March, surprising regulators and kicking off deposit flight across other regional banks. 

“That’s just an extraordinary scale and speed of a run that I had not ever seen,” Barr said. “I think all of us were caught incredibly off-guard by the massive bank run that occurred when it did.”  

Representatives from both political parties pressed Barr, Martin Gruenberg, head of the Federal Deposit Insurance Corp, and Treasury undersecretary for domestic finance Nellie Liang on why regulators did not act more forcefully, given Fed supervisors had been raising issues with the bank for months.  

“There is still much we need to understand of what you knew when and how you responded,” said Republican Patrick McHenry, chair of the committee. “The bottom line for you as the panel, there’s bipartisan frustration with many of your answers. There’s a question of accountability and appearance of lack of accountability.”  

Barr on Tuesday criticized SVB for going months without a chief risk officer and for how it modeled interest rate risk, but lawmakers said the response wasn’t aggressive enough, with Democrat Juan Vargas saying, “it seems like they blew you guys off and you didn’t do anything.”  

Reports due May 1 

Both the Fed and FDIC are expected to produce reports on the failure of Silicon Valley Bank by May 1. The Fed’s report will concentrate on supervision and regulation while the FDIC report will center around deposit insurance.  

Several lawmakers asked Barr to make available the Fed’s confidential communications on supervision.  

Barr told the House Financial Services Committee that he first became aware of stress at Silicon Valley Bank on the afternoon of March 9, but that the bank reported to supervisors that morning that deposits were stable.  

Gruenberg of the FDIC told lawmakers he also became aware of SVB’s stress that Thursday evening.  

All three testifying said that regulators had sufficient tools to deal with the crisis once it happened, but Barr said the Fed could have done better on supervision. 

SVB and Signature became the second- and third-largest bank failures in U.S. history. Investors fled to safe havens like bonds while depositors moved funds to bigger institutions and money market funds. 

Markets have calmed since Swiss regulators engineered the sale of troubled Swiss giant Credit Suisse to rival UBS, and after SVB’s assets were sold to First Citizens BancShares FCNCA.O. However, investors remain wary of more troubles lurking in the financial system. 

Some Democrats have also argued a 2018 bank deregulation law is to blame. That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature. 

The White House is readying plans for legislation that would reinstate those regulations on midsize banks, the Washington Post reported on Wednesday, citing two sources familiar with the matter.  
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Poland’s agriculture minister promised financial support from the government and the European Union and easier rules for constructing grain storage as he met Wednesday with farmers angered by falling grain prices.

Farmers in Poland blame the drop in prices on an inflow of huge amounts of Ukrainian grain that was supposed to go to Africa and the Middle East. Bulgarian farmers also staged a border protest Wednesday over the issue.

Poland and other countries in the region have offered to help transit Ukraine grain to third-country markets after Russia blocked traditional routes when it invaded Ukraine 13 months ago. The European Union, which borders Ukraine, has waived customs duties and import quotas to facilitate the transport — also through Romania and Bulgaria — to markets that had counted on the deliveries.

But farmers in transit countries say the promised out-channels are not working as planned. As a result, they argue, the grain stays, flooding their markets and bringing prices down — to their great loss — while fertilizer and energy costs are skyrocketing.

After a round of talks with farmer organizations, Poland’s Agriculture Minister Henryk Kowalczyk said they agreed on more than $277 million in compensation to farmers and traders who suffered financial losses and subsidies for companies transporting the grain to ports, to be shipped out of Poland.

The ministry also agreed to waive permission requirements for building small-sized grain storage facilities. But the farmers are expecting more talks and more support.

In Bulgaria, hundreds of farmers on Wednesday began a three-day blockade of the main checkpoints on the border with Romania to protest tariff-free imports of Ukrainian grain. They say about 40% of their crop from last year remains unsold amid huge supply, and there is no storage room just a few months ahead of the coming harvest.

They displayed banners reading: “Stop the genocide of agriculture” and “We want to be competitive farmers.”

Last week, Brussels offered a total of $61 million in compensation to affected farmers, of which Bulgaria would receive about $18 million and Poland about $32.5 million euros — amounts that protesters and some governments say are insufficient.

Daniela Dimitrova, regional leader of Bulgaria’s grain producers’ union, said Ukrainian imports make Bulgarian farmers noncompetitive.

“We stand in solidarity with Europe and its support for Ukraine, but the European Commission should look at each individual member state and make farmers competitive,” she said.

Prime Minister Mateusz Morawiecki said grain from Ukraine was “destabilizing our market” and steps should be taken to urgently export it while reducing imports from Ukraine. He said the European Commission, the EU’s executive arm, had regulations at its disposal to get the situation under control, as it was having negative effects also on other countries in the region.

“We do not agree for this grain to come to Poland’s and Romania’s markets in huge amounts and destabilize our markets,” Morawiecki told a news conference, while stressing that “transit is most welcome.”

At the start of the talks with farmers and grain exporters, Kowalczyk, the agriculture minister, blamed falling grain prices on a world-wide trend. He said that while more compensation funds could be expected from Brussels the main goal was to increase grain export and free space in silos ahead of this summer’s Polish harvest. He admitted that the original plan to transit grain through Poland did not go exactly as expected.
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Gordon Moore, the Intel Corp. co-founder who set the breakneck pace of progress in the digital age with a simple 1965 prediction of how quickly engineers would boost the capacity of computer chips, has died. He was 94.

Moore died Friday at his home in Hawaii, according to Intel and the Gordon and Betty Moore Foundation.

Moore, who held a Ph.D. in chemistry and physics, made his famous observation — now known as “Moore’s Law” — three years before he helped start Intel in 1968. It appeared among several articles about the future written for the now-defunct Electronics magazine by experts in various fields.

The prediction, which Moore said he plotted out on graph paper based on what had been happening with chips at the time, said the capacity and complexity of integrated circuits would double every year.

Strictly speaking, Moore’s observation referred to the doubling of transistors on a semiconductor. But over the years, it has been applied to hard drives, computer monitors and other electronic devices, holding that roughly every 18 months a new generation of products makes their predecessors obsolete.

It became a standard for the tech industry’s progress and innovation.

“It’s the human spirit. It’s what made Silicon Valley,” Carver Mead, a retired California Institute of Technology computer scientist who coined the term “Moore’s Law” in the early 1970s, said in 2005. “It’s the real thing.”

‘Wisdom, humility and generosity’

Moore later became known for his philanthropy when he and his wife established the Gordon and Betty Moore Foundation, which focuses on environmental conservation, science, patient care and projects in the San Francisco Bay area. It has donated more than $5.1 billion to charitable causes since its founding in 2000.

“Those of us who have met and worked with Gordon will forever be inspired by his wisdom, humility and generosity,” foundation president Harvey Fineberg said in a statement.

Intel Chairman Frank Yeary called Moore a brilliant scientist and a leading American entrepreneur.

“It is impossible to imagine the world we live in today, with computing so essential to our lives, without the contributions of Gordon Moore,” he said.

In his book “Moore’s Law: The Life of Gordon Moore, Silicon Valley’s Quiet Revolutionary,” author David Brock called him “the most important thinker and doer in the story of silicon electronics.”

Helped plant seed for renegade culture

Moore was born in San Francisco on Jan. 3, 1929, and grew up in the tiny nearby coastal town of Pescadero. As a boy, he took a liking to chemistry sets. He attended San Jose State University, then transferred to the University of California, Berkeley, where he graduated with a degree in chemistry.

After getting his Ph.D. from the California Institute of Technology in 1954, he worked briefly as a researcher at Johns Hopkins University.

His entry into microchips began when he went to work for William Shockley, who in 1956 shared the Nobel Prize for physics for his work inventing the transistor. Less than two years later, Moore and seven colleagues left Shockley Semiconductor Laboratory after growing tired of its namesake’s management practices.

The defection by the “traitorous eight,” as the group came to be called, planted the seeds for Silicon Valley’s renegade culture, in which engineers who disagreed with their colleagues didn’t hesitate to become competitors.

The Shockley defectors in 1957 created Fairchild Semiconductor, which became one of the first companies to manufacture the integrated circuit, a refinement of the transistor.

Fairchild supplied the chips that went into the first computers that astronauts used aboard spacecraft.

Called Moore’s Law as ‘a lucky guess’

In 1968, Moore and Robert Noyce, one of the eight engineers who left Shockley, again struck out on their own. With $500,000 of their own money and the backing of venture capitalist Arthur Rock, they founded Intel, a name based on joining the words “integrated” and “electronics.”

Moore became Intel’s chief executive in 1975. His tenure as CEO ended in 1987, thought he remained chairman for another 10 years. He was chairman emeritus from 1997 to 2006.

He received the National Medal of Technology from President George H.W. Bush in 1990 and the Presidential Medal of Freedom from President George W. Bush in 2002.

Despite his wealth and acclaim, Moore remained known for his modesty. In 2005, he referred to Moore’s Law as “a lucky guess that got a lot more publicity than it deserved.”

He is survived by his wife of 50 years, Betty, sons Kenneth and Steven, and four grandchildren.
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From Zimbabwe, where many must work at night because it’s the only time there is power, to Nigeria where collapses of the grid are frequent, the reliable supply of electricity remains elusive across Africa.

The electricity shortages that plague many of Africa’s 54 countries are a serious drain on the continent’s economic growth, energy experts warn.

In recent years South Africa’s power generation has become so inadequate that the continent’s most developed economy must cope with rolling power blackouts of eight to 10 hours per day.

Africa’s sprawling cities have erratic supplies of electricity, but large swaths of the continent’s rural areas have no power at all. In 2021, 43% of Africans — about 600 million people — lacked access to electricity with 590 million of them in sub‐Saharan Africa, according to the International Energy Agency.

Investments of nearly $20 billion are required annually to achieve universal electrification across sub-Saharan Africa, according to World Bank estimates. Of that figure nearly $10 billion is needed annually bring power and keep it on in West and Central Africa.

There are many reasons for Africa’s dire delivery of electricity including ageing infrastructure, lack of government oversight and a shortage of skills to maintain the national grids, according to Andrew Lawrence, an energy expert at the Witwatersrand University Business School in Johannesburg.

A historical problem is that many colonial regimes built electrical systems largely reserved for the minority white population and which excluded large parts of the Black population.

Today many African countries rely on state-owned power utilities.

Much attention has focused in the past two years on the Western-funded “Just Energy Transition,” in which France, Germany, the United Kingdom, the United States and the European Union are offering funds to help poorer countries move from highly polluting coal-fired power generation to renewable, environmentally friendly sources of power. Africa as a region should be among the major beneficiaries in order to expand electricity access on the continent and improve the struggling power grids, said Lawrence.

“The transition should target rural access and place at the forefront the electrification of the continent as a whole. This is something that is technically possible,” he said.

The Western powers vowed to make $8.5 billion available to help South Africa move away from its coal-fired power plants, which produce 80% of the country’s power.

As a result of its dependence upon coal, South Africa is among the top 20 highest emitters of planet-warming greenhouse gases in the world and accounts for nearly a third of all of Africa’s emissions, according to experts.

South Africa’s plan to move away from coal, however, is hampered by its pressing need to produce as much power as possible each day.

The East African nation of Uganda for years has also grappled with power cuts despite massive investment in electricity generation.

Nigeria, Africa’s most populous country, has grappled with an inadequate power supply for many years, generating just 4,000 megawatts though the population of more than 210 million people needs 30,000 megawatts, say experts. The oil-rich but energy-poor West African nation has ramped up investments in the power sector but endemic corruption and mismanagement have resulted in little gains.

In Zimbabwe, electricity shortages that have plagued the country for years have worsened as the state authority that manages Kariba, the country’s biggest dam, has limited power generation due to low water levels.

Successive droughts have reduced Lake Kariba’s level so much that the Kariba South Hydro Power Station, which provides Zimbabwe with about 70% of its electricity, is currently producing just 300 megawatts, far less than its capacity of 1,050 megawatts.

Zimbabwe’s coal-fired power stations that also provide some electricity have become unreliable due to aging infrastructure marked by frequent breakdowns. The country’s solar potential is yet to be fully developed to meaningfully augment supply.

This means that Harare barber Omar Chienda never knows when he’ll have the power needed to run his electric clippers.

“What can we do? We just have to wait until electricity is back but most of the time it comes back at night,” said Chienda, a 39-year-old father of three. “That means I can’t work, my family goes hungry.”

In Nigeria’s capital city of Abuja, restaurant owner Favour Ben, 29, said she spends a large part of her monthly budget on electricity bills and on petrol for her generator, but adds that she gets only an average of seven hours of power daily.

“It has been very difficult, especially after paying your electricity bill and they don’t give you light.” said Ben. “Most times, I prepare customers’ orders but if there is no light (power for a refrigerator), it turns bad the next day (and) I have lost money for that.”

Businesses in Nigeria suffer an annual loss of $29 billion as a result of unreliable electricity, the World Bank said, with providers of essential services often struggling to keep their operations afloat on generators.

As delegates gathered in Cape Town this month to discuss Africa’s energy challenges, there was a resounding sentiment that drawn-out power shortages on the continent had to be addressed urgently. There was some hope that the Western-funded “Just Energy Transition” would create some opportunities, but many remained skeptical.

Among the biggest critics of efforts to have countries like South Africa to transition quickly from the use of coal to cleaner energy is South Africa’s Minister of Mineral Resources and Energy Gwede Mantashe.

He is among those advocating that Africa use all sources available to it to produce adequate power for the continent, including natural gas, solar, wind, hydropower and especially coal.

“Coal will be with us for many years to come. Those who see it as corruption or a road to whatever, they are going to be disappointed for many, many years,” said Mantashe. “Coal is going to outlive many of us.”
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The multi-regulator U.S. Financial Stability Oversight Council (FSOC) agreed Friday that the U.S. banking system remains “sound and resilient” despite stress on some institutions, the U.S. Treasury said in its latest statement to calm jittery markets and bank depositors.

In a readout of a closed meeting chaired by Treasury Secretary Janet Yellen, the department said that FSOC participants heard a presentation on market developments from the staff of the Federal Reserve Bank of New York.

“The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient,” the Treasury said in a statement.

The videoconference meeting came as markets continued to seesaw amid concerns that a two-week-old banking crisis sparked by the failures of Silicon Valley Bank SIVB.O and Signature Bank SBNY.O could worsen, spreading more runs on smaller banks

The body of financial regulators, led by Yellen and including the heads of the Federal Reserve, the Federal Deposit Insurance Corp (FDIC), the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and other regulatory agencies, last met March 12.

That was the same day that the FDIC, Fed and Treasury announced emergency actions to backstop all deposits in the two failed banks and create a new Fed lending facility to boost liquidity for all banks.

Two prominent House of Representatives Republicans demanded Friday that Yellen provide them with additional information about the March 12 meeting, including unredacted minutes, votes, details on timing and bank stress test results.

“The events that have transpired over the last 12 days related to both Silicon Valley Bank and Signature Bank, the ensuing market instability, and your role raise a number of questions for policymakers,” wrote Representatives Bill Huizenga and Andy Barr who chair House Financial Services subcommittees, in a letter to Yellen.

They added that the basis of the Treasury, Fed and FDIC determinations in the SVB and Signature cases “are of particular importance.”

The Friday FSOC meeting came as global banking contagion fears again caused European bank stocks to fall sharply, with Deutsche Bank and UBS knocked by worries that regulators and central banks have not yet contained the worst shock to the sector since the 2008 global financial crisis.

But on Wall Street, shares recovered from an earlier sell-off as three Federal Reserve bank presidents said in separate remarks that there was no indication that financial stress was worsening this week, allowing them to raise interest rates by a quarter percentage point.

Yellen again sought to calm fears of further bank deposit runs Thursday, telling U.S. lawmakers that she was prepared to repeat actions taken in the Silicon Valley and Signature Bank failures to safeguard uninsured bank deposits if failures threatened more deposit runs.

Those actions to invoke “systemic risk exceptions” were taken by Yellen, President Joe Biden, the FDIC, and the Fed, which supervised Silicon Valley and Signature.
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Adeline Lefebvre was scrunched up next to a newsstand as a swelling crowd of demonstrators pushed past her at the Place de la Bastille — the iconic Paris square that earned its fame from French Revolution days.

Rock music blared and the gigantic balloons of the leftist CGT trade union bobbed in the air on this ninth day of nationwide strikes and protests against French President Emmanuel Macron’s unpopular pension reform.

Lefebvre, 58, a secretary who began working at 17, has been at every one.

“Macron needs to understand things aren’t working out,” she said of the widespread opposition to his plans to raise the retirement age from 62 to 64. “We need to start over. But he’s in total denial.”

A day after Macron defiantly defended his reform on public TV — after his government narrowly survived a no-confidence vote in the national assembly — public anger shows no sign of abating.

Hundreds of thousands of people marched in the capital and elsewhere in the country. Unions calculated roughly 3.5 million nationwide; France’s Interior Ministry put the number at just over 1 million.

Hundreds were arrested after clashes with police.

“Macron doesn’t listen, he acts like a king,” protesters in Lyon chanted.

‘I’m prepared to be unpopular’

In Paris, people brandished posters reading “Macron the scornful of the Republic” — a play on words in French referring to his presidency.

“Maybe we have a chance to stop this law” by protesting, said Manon Chauvigny, who works with disabled people.

“Otherwise,” her partner warned, “it’s the revolution.”

Interviewed Wednesday by two top news stations, Macron said he hoped the reform would become law by year’s end.

“This reform is necessary. It does not make me happy. I would have preferred not to do it,” he said, arguing that the pension system would go bankrupt if nothing was done. “I’m prepared to be unpopular.”

Instead of calming an angry nation, his remarks appear to have further incensed it. A poll published Thursday on France’s BFMTV channel found seven in 10 respondents found his arguments unconvincing. More than 60% believe Macron’s remarks will spark even greater anger on the streets.

“There’s money in France” to pay for the pension reform, said retired insurance worker Jean-Francois Vilain, who joined the Paris protest sporting the CGT union logo. “Only it’s not in the hands of working people. We see financial companies making billions in profits, and they share very little of it.”

Sporting bright red, construction worker Djcounda Traore joined colleagues to march in the capital.

“Working until 64 years isn’t easy in our profession,” he said. “Maybe if everyone protests, we’ll win.”

Protester Lefebvre was less optimistic.

“I’d like to say we’ll win,” she said. “But I’m afraid that we won’t.”

Trains disrupted, garbage left to fester

Trains and metros were seriously disrupted Thursday. Fuel refinery blockages in some parts of the country have left gas stations dry and sparked fears of potential shortages at Paris airports.

While some garbage service has resumed in the French capital, rolling strikes leave many bags festering on sidewalks.

Reports also suggest the unrest in France may disrupt the upcoming visit of Britain’s King Charles to France in his first foreign trip as monarch.

French union leaders and political opponents have slammed Macron’s response, describing him as disdainful and failing to listen to the streets.

The president’s remarks Wednesday show “scorn toward the millions of people who have protested,” said CGT union leader Philippe Martinez.

Macron “reacts as if the crisis was already behind him,” France’s influential Le Monde newspaper wrote in an editorial Wednesday.

“For the country to advance, a president of the Republic needs to know how to cobble a consensus,” it added. “Right now, we’re nowhere near there.”
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Worries about recent bank failures and bailouts are rippling through the world economy, from New York to Beijing, and central bankers are working to calm depositors and financial markets. Mike O’Sullivan reports from California, where a major player in the tech industry, Silicon Valley Bank, collapsed earlier this month. Rob Garver contributed.
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The Federal Reserve extended its year-long fight against high inflation Wednesday by raising its key interest rate by a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system. 

“The U.S. banking system is sound and resilient,” the Fed said in a statement after its latest policy meeting ended. 

At the same time, the Fed warned that the financial upheaval stemming from the collapse of two major banks is “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.” 

The central bank also signaled that it’s likely nearing the end of its aggressive streak of rate hikes. In a statement, it removed language that had previously indicated it would keep raising rates at upcoming meetings. The statement now says “some additional policy firming may be appropriate” — a weaker commitment to future hikes. 

And in a series of quarterly projections, the policymakers forecast that they expect to raise their key rate just one more time – from its new level Wednesday of about 4.9% to 5.1%, the same peak level they had projected in December. 

Still, in its latest statement, the Fed included some language indicating its inflation fight remains far from complete. It said hiring is “running at a robust pace” and noted that “inflation remains elevated.” 

It removed a phrase — “inflation has eased somewhat” — it had included in its previous statement in February. 

Speaking at a news conference, Chair Jerome Powell said, “The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.” 

The latest rate hike suggests that Powell is confident the Fed can manage a dual challenge: Cool still-high inflation through higher loan rates, while defusing turmoil in the banking sector through emergency lending programs and the Biden administration’s decision to cover uninsured deposits at the two failed banks. 

The Fed’s signal that the end of its rate-hiking campaign is in sight may also soothe financial markets as they digest the consequences of the U.S. banking turmoil and the takeover last weekend of Credit Suisse by its larger rival UBS. 

The central bank’s benchmark short-term rate has now reached its highest level in 16 years. The new level likely will lead to higher costs for many loans, from mortgages and auto purchases to credit cards and corporate borrowing. The succession of Fed rate hikes also has heightened the risk of a recession. 

The Fed’s new policy decision reflects an abrupt shift. Early this month, Powell had told a Senate panel that the Fed was considering raising its rate by a substantial half-point. At the time, hiring and consumer spending had strengthened more than expected, and inflation data had been revised higher. 

The troubles that suddenly erupted in the banking sector two weeks ago likely led to the Fed’s decision to raise its benchmark rate by a quarter-point rather than a half-point. Some economists have cautioned that even a modest quarter-point rise in the Fed’s key rate, on top of its previous hikes, could imperil weaker banks whose nervous customers may decide to withdraw significant deposits. 

Silicon Valley Bank and Signature Bank were both brought down, indirectly, by higher rates, which pummeled the value of the Treasurys and other bonds they owned. As anxious depositors withdrew their money en masse, the banks had to sell the bonds at a loss to pay the depositors. They couldn’t raise enough cash to do so. 

After the fall of the two banks, Credit Suisse was taken over by UBS. Another struggling bank, First Republic, has received large deposits from its rivals in a show of support, though its share price plunged Monday before stabilizing. 

The Fed is deciding, in effect, to treat inflation and financial turmoil as two separate problems, to be managed simultaneously by separate tools: Higher rates to address inflation and greater Fed lending to banks to calm financial turmoil. 
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Sri Lanka has secured a $ 2.9 billion loan from the International Monetary Fund, raising hopes the funding will mark the beginning of economic revival in a country confronting its worst crisis in decades.  

The IMF approval Monday came about a year after the island nation of 22 million was plunged into turmoil as it grappled with crippling shortages of food, fuel and medicine, triggering massive street protests.    

Although the situation has improved marginally, the country still faces an uphill task in repairing its broken economy. The snaking lines for fuel have vanished, the hours-long daily power cuts have ended and severe shortages of cooking gas have eased.  But high inflation is still hurting millions of people and the government suspended repayment of its foreign debt as its foreign exchange reserves dipped to record lows.  

The approval of the IMF rescue package took longer than initially expected as Sri Lanka negotiated with its biggest creditor, China, to support the restructuring of its debt.

“Sri Lanka is no longer deemed bankrupt by the world,” Sri Lankan President Ranil Wickremesinghe said in a video statement. “The loan facility serves as an assurance from the international community that Sri Lanka has the capacity to restructure its debt and resume normal transactions.” 

The IMF will immediately disburse $333 million to Sri Lanka, with more funds to follow in the coming months. The president’s office said in a statement that the agreement will enable the country to access up to $7 billion altogether from the IMF and other international financial institutions.  

“The amount of the loan may not be large, but its significance lies in the IMF saying that it is OK to lend to Sri Lanka,” says Paikiasothy Saravanamuttu, Executive Director at the Center for Policy Alternatives in Colombo. “That opens the doors for other international lenders to come forward.” 

However, the road to recovery will not be easy — the IMF loan has been approved with conditions that will involve tightening public spending and rolling back some policies that led to the current crisis.  

The government has already raised income taxes and slashed electricity and fuel subsidies, fulfilling some of those conditions. But there are more stringent reforms that will have to be implemented in the months ahead.  

Analysts say that the government could face hostility from trade unions over plans to privatize several loss-making state-owned companies as part of the reform agenda. Earlier this month, the government’s decision to postpone local elections because of lack of funds triggered angry protests.  

The government also agreed to enact tough anti-corruption laws as it negotiated with the IMF, which has said that Colombo must rein in the corruption that has been partly blamed for the crisis.  

The IMF said Tuesday it is also assessing governance in Sri Lanka, making it the first Asian country facing scrutiny for corruption as part of a bailout program.  

“We emphasize the importance of anti-corruption and governance reforms as a central pillar of the program,” Peter Breuer, the IMF’s senior mission chief for Sri Lanka, told reporters Tuesday. “They are indispensable to ensure the hard-won gains from the reforms benefit the Sri Lankan people.” 

There are some hopeful signs that the economy is now on the right path. The crucial tourism industry that was devastated by the COVID-19 pandemic is recovering as visitors begin to return to the island country’s pristine tropical beaches.  

“Last year, I lost my job, and I was unemployed for almost nine months. It was a very bad period for me,” says tour guide Hasitha Vishwa, who is based in Kalutara, famed for its beaches. “But since November, I have again found work as tourists from countries like India, Russia and Britain return. So, things are a little better,” he said, expressing hope that the IMF loan is a signal that the worst is over the country. 

The economy of a country that just years ago was ranked as a middle- income country unraveled after being hit both by the COVID-19 pandemic and economic mismanagement blamed on the previous government led by former President Gotabaya Rajapaksa. He resigned last July after protestors stormed his residence.  

The protests ended after Wickremesinghe took a tough approach to the demonstrations but there is simmering anger in the country over the difficult times that lie ahead.  

“The protests now are over the higher taxes and electricity tariffs that ordinary people have to pay when they are already facing difficulties. There will be resentment over the conditions that the IMF loan involves,” according to analyst Saravanamuttu.  

The situation in Sri Lanka is still bleak, according to aid organizations. Half of the families in the country have been forced to reduce portions they feed their children, according to a survey by Save the Children released this month.
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Amazon plans to eliminate 9,000 more jobs in the next few weeks, CEO Andy Jassy said in a memo to staff Monday. 

The job cuts would mark the second largest round of layoffs in the company’s history, adding to the 18,000 employees the tech giant said it would lay off in January. The company’s workforce doubled during the pandemic, however, during a hiring surge across almost the entire tech sector. 

Tech companies have announced tens of thousands of job cuts this year. 

In the memo, Jassy said the second phase of the company’s annual planning process completed this month led to the additional job cuts. He said Amazon will still hire in some strategic areas. 

“Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago. The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them, so people had the information as soon as possible,” Jassy said. 

The job cuts announced Monday will hit profitable areas for the company including its cloud computing unit AWS and its burgeoning advertising business. Twitch, the gaming platform Amazon owns, will also see some layoffs as well as Amazon’s PXT organizations, which handle human resources and other functions. 

Prior layoffs had also hit PXT, the company’s stores division, which encompasses its e-commerce business as well as the company’s brick-and-mortar stores such as Amazon Fresh and Amazon Go, and other departments such as the one that runs the virtual assistant Alexa. 

Earlier this month, the company said it would pause construction on its headquarters building in northern Virginia, though the first phase of that project will open this June with 8,000 employees. 

Like other tech companies, including Facebook parent Meta and Google parent Alphabet, Amazon ramped up hiring during the pandemic to meet the demand from homebound Americans that were increasingly making purchases online. 

Amazon’s workforce, in warehouses and offices, doubled to more than 1.6 million people in about two years. But demand slowed as the worst of the pandemic eased. The company began pausing or canceling its warehouse expansion plans last year. 

Amid growing anxiety over the potential for a recession, Amazon in the past few months shut down a subsidiary that’s been selling fabrics for nearly 30 years and shuttered its hybrid virtual, in-home care service Amazon Care among other cost-cutting moves. 

Jassy said Monday given the uncertain economy and the “uncertainty that exists in the near future,” the company has chosen to be more streamlined. 

He said the teams that will be impacted by the latest round of layoffs are not done making final decisions on which roles will be eliminated. The company plans to finalize those decisions by mid- to late April and notify those who will be laid off. 
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UBS is set to take over its troubled Swiss rival Credit Suisse for $3.25 billion following weekend crunch talks aimed at preventing a wider international banking crisis, but Asian equities sank Monday on lingering worries about the sector.   

The deal, in which Switzerland’s biggest bank will take over the second largest, was vital to prevent economic turmoil from spreading throughout the country and beyond, the Swiss government said.   

The move was welcomed in Washington, Frankfurt and London as one that would support financial stability, after a week of turbulence following the collapse of two U.S. banks.   

After a dramatic day of talks at the finance ministry in Bern — and with the clock ticking towards the markets reopening on Monday — the takeover was announced at a news conference.   

Swiss President Alain Berset was flanked by UBS chairman Colm Kelleher and his Credit Suisse counterpart Axel Lehmann, along with the Swiss finance minister and the heads of the Swiss National Bank (SNB) and the financial regulator FINMA.   

The wealthy Alpine nation is famed for its banking prominence and Berset said the takeover was the “best solution for restoring the confidence that has been lacking in the financial markets recently”.   

If Credit Suisse went into freefall, it would have had “incalculable consequences for the country and for international financial stability”, he said.   

Credit Suisse said in a statement that UBS would take it over for “a merger consideration of three billion Swiss francs ($3.25 billion)”.   

After suffering heavy falls on the stock market last week, Credit Suisse’s share price closed Friday at 1.86 Swiss francs, with the bank worth just over $8.7 billion.   

UBS said Credit Suisse shareholders would get 0.76 Swiss francs per share.   

“Given recent extraordinary and unprecedented circumstances, the announced merger represents the best available outcome,” Lehmann said.   

Asian equities still fell in early trade Monday, with Hong Kong, Tokyo, Sydney, Seoul and Singapore all in the red.   

Hong Kong’s monetary authority sought to calm jitters Monday morning, saying that “exposures of the local banking sector to Credit Suisse are insignificant”, as the bank’s assets make up “less than 0.5 percent” of the city’s banking sector.    

Despite that, the city’s banking stocks tumbled: HSBC dropped six percent, Standard Chartered shed five percent and Hang Seng Bank gave up nearly two percent, in line with a global sell-off in the sector on worries about lenders’ exposure to bonds linked to Credit Suisse.   

“Uncertainty could remain high for quite some time, even if recent bank support measures succeed,” said analyst Stephen Innes of SPI Asset Management.     

‘Huge collateral damage’ risk    

Swiss Finance Minister Karin Keller-Sutter said that bankruptcy for Credit Suisse could have caused “huge collateral damage”.    

With the “risk of contagion” for other banks, including UBS itself, the takeover has “laid the foundation for greater stability both in Switzerland and internationally”, she said.   

The deal was warmly received internationally.   

The decisions taken in Bern “are instrumental for restoring orderly market conditions and ensuring financial stability,” said European Central Bank chief Christine Lagarde.   

“The euro area banking sector is resilient, with strong capital and liquidity positions.”   

U.S. Federal Reserve chair Jerome Powell and Treasury Secretary Janet Yellen said in a joint statement: “We welcome the announcements by the Swiss authorities today to support financial stability.”   

The sentiment was echoed by British Finance Minister Jeremy Hunt.   

The Fed and the central banks of Canada, Britain, Japan, the EU and Switzerland announced they would launch a coordinated effort Monday to improve banks’ access to liquidity.   

The SNB announced 100 billion Swiss francs of liquidity would be available for the UBS-Credit Suisse takeover.   

Keller-Sutter insisted the deal was “a commercial solution and not a bailout”.  

UBS chairman Kelleher said: “We are committed to making this deal a great success. UBS will remain rock solid.”   

Job worries   

The takeover creates a banking giant such as Switzerland has never seen before — and raises concerns about possible layoffs.   

The Swiss Bank Employees Association said there was “a great deal at stake” for the 17,000 Credit Suisse staff, plus tens of thousands of jobs outside of the banking industry potentially at risk.   

Like UBS, Credit Suisse was one of 30 worldwide Global Systemically Important Banks — deemed of such importance to the international banking system that they are colloquially called “too big to fail”.   

But the markets saw the bank as a weak link in the chain.   

Amid fears of contagion after the collapse of two U.S. banks, Credit Suisse’s share price plunged by more than 30% on Wednesday to a record low of 1.55 Swiss francs. That saw the SNB step in overnight with a $54-billion lifeline.   

After recovering some ground Thursday, its shares closed down 8% on Friday at 1.86 Swiss francs, as it struggled to retain investor confidence.   

In 2022, the bank suffered a net loss of $7.9 billion and expects a “substantial” pre-tax loss this year.   

Credit Suisse’s share price has tumbled from 12.78 Swiss francs in February 2021 due to a string of scandals that it has been unable to shake off. 
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When the U.S. government announced this month that it had stepped in to take over Silicon Valley Bank (SVB) and Signature Bank, it was a 90-year-old Great Depression-era agency that took the lead in assuring depositors that their funds were safe and quelling a bank run that threatened broader damage to the industry.

The Federal Deposit Insurance Corp. took control of SVB on March 10 and Signature Bank two days later, moves that rendered the publicly traded stock of both institutions worthless but preserved other assets for distribution to account holders and each bank’s creditors.

In a decision some found surprising, the FDIC announced that all deposits held at both banks would be fully guaranteed. Historically, depositors have been protected up to $250,000, a limit designed to keep the overwhelming majority of individual depositors safe from loss.

The agency decided, however, that to prevent “contagion” — panic about one failing bank spreading to broader panic about others — it would make all depositors whole.

The decision was also likely motivated by the fact that many businesses, primarily in the tech sector, kept large accounts at SVB that they used to meet payroll and ordinary business expenses. The impact of so many companies suddenly being unable to pay thousands of employees would have been hard to estimate but could have potentially damaged the economy.

The FDIC and the Biden administration were quick to deny that the two banks had been the subjects of a “bailout,” stressing that bank executives had been fired, stockholders’ equity had been wiped out, and any funds supplied by the agency to make depositors whole would come from an insurance fund financed by premiums paid by insured banks.

The FDIC, however, will have to raise assessments on banks to replenish what money it spends on the resolution of SVB and Signature. Banks will likely pass these costs on to their customers by charging higher fees or increasing interest on loans.

History of the FDIC

The FDIC was created in 1933, after the U.S. weathered years of panic during the Great Depression, which led to the closures of thousands of banks. Between 1921 and 1929, approximately 5,700 banks across the U.S. failed, some because of poor management and many because depositors lost confidence and demanded withdrawals so rapidly that the banks simply ran out of cash.

Things worsened between 1929 and 1933, when nearly 10,000 banks across the country failed. During a particularly difficult week in February 1933, bank panics were so pervasive that governors in almost all U.S. states acted to temporarily close all banks.

The FDIC was created in the aftermath of that crisis, when the federal government finally acted on a long-delayed plan to establish national deposit insurance. The agency originally guaranteed individual deposits of up to $2,500, a level that has been periodically increased over the decades.

The agency is funded by premiums that banks and savings associations pay for deposit insurance coverage. It is managed by a board of five presidential appointees. The current chair of the FDIC is Martin J. Gruenberg. By statute, the director of the Consumer Financial Protection Bureau and the Comptroller of the Currency, whose agency supervises nationally chartered banks, are also members. Two other appointees round out the board, which cannot have more than three members of the same political party.

In its nine decades, the FDIC has closed hundreds of failed banks, but insured deposits have always been repaid in full.

Promoting financial stability

“The mission of the FDIC is to promote financial stability,” said Diane Ellis, the former director of the agency’s Division of Insurance and Research. “The FDIC does that by exercising several authorities. One is to provide deposit insurance so that bank depositors can be confident that they’ll get their money back regardless of what happens with their bank.”

In addition, the agency has the authority to “resolve” failed banks, which can involve selling the bank outright to another institution, creating a “bridge” bank that provides ongoing services to depositors while the agency works toward a resolution, or selling off the bank’s assets to return as much money as possible to depositors whose holdings exceed the coverage limit.

Ellis, now a senior managing director at the banking network IntraFi, noted that the agency also has oversight authority over the banks it insures.

“For open banks, examiners conduct regular examinations to make sure banks are operating in a safe and sound manner … promoting a healthy, stable banking system, which is important for economic growth,” she told VOA.

Avoiding ‘moral hazard’

When the FDIC was established, capping the standard insurance amount per depositor was a central feature of its design. The creators of the agency were concerned about a problem called “moral hazard.” They worried that if the federal government guaranteed 100% of deposits, individuals and businesses would fail to exercise due diligence when deciding what banks to trust with their money, and that lack of scrutiny would result in banks taking excessive risks.

“Legislators wanted to strike a balance, to protect people up to a certain amount, but not everything, so that there’d be an incentive for people to make sure that their money was in a safe bank rather than a dangerous one,” said John Bovenzi, who served as chief operating officer and deputy to the chairman of the FDIC from 1999 to 2009.

Bovenzi, the co-founder of the Bovenzi Group, a financial services consultancy, told VOA that he was initially surprised by the decision of the FDIC and other regulators to make all uninsured depositors whole.

“These weren’t the largest institutions. Silicon Valley and Signature, they were in sort of a second tier and weren’t viewed as ‘too big to fail,'” he said.

However, Bovenzi said, it soon became apparent to regulators that there were other banks in the country that operated with business models similar to that of SVB, which had large amounts of low-interest securities on its books, the value of which was being systematically undercut by the Federal Reserve’s decision to raise interest rates dramatically over the past year.

“What happened was that they saw there was too much spillover effect to other institutions, so they invoked what’s called a ‘systemic risk exception,'” he said. Had this not been the case, he said, the FDIC would have had to conduct the closing in a way that resulted in the least cost to it and the government to save money, “and that would have meant uninsured taking losses. By protecting the uninsured, the FDIC raises its own costs to cover it. And so it needed to say, ‘We don’t want to do it for the institution, but we need to do it for the system.'”

Setting a precedent

The decision to protect all deposits at SVB and Signature was not unique. During the financial crisis sparked by widespread defaults in the subprime mortgage sector from 2007 to 2010, regulators shuttered several hundred banks in the space of a few years, and implemented a policy of protecting all deposits to avoid increasing the damage to the broader economy.

The decision to do so for SVB and Signature, though, absent such a widespread crisis, has raised questions about whether a precedent has been set that will lead depositors to expect to be rescued by the government if their bank fails.

In testimony before Congress Thursday, Treasury Secretary Janet Yellen warned that the treatment of SVB and Signature should not be taken as a signal that similar protection will be extended to other banks in the future.

Such action, she said, would take place only when “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”
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When Caroline Sadaka buys groceries in the Lebanese capital Beirut, she keeps her phone in hand – not to check her shopping list but to calculate the spiraling costs of goods now priced at volatile exchange rates that vary by store and sector.

As Lebanon’s economy continues to collapse, an array of exchange rates for the local pound has emerged, complicating personal accounting and dimming hopes of fulfilling a reform requirement set out by the International Monetary Fund.

The government’s official exchange rate was set at 15,000 pounds to the U.S. dollar in February, a nearly 90% devaluation from the longtime peg of 1507.5.

But the Central Bank is selling dollars at a rate of 79,000 to the greenback while the finance minister intends to calculate tariffs for imported goods at 45,000 pounds.

The parallel market rate is meanwhile hovering around 107,000 pounds and changing daily. Supermarkets and fuel stations are required to post signs with the value they’ve adopted for the day, but the rate is changing so fast that many are pricing in the relatively stable U.S dollar instead.

Examining a can of tuna, Sadaka illustrated the daily quandary faced by shoppers. “This doesn’t have a (logical) price. If you look, it’s in Lebanese pounds, so is this the price? Or is this an old price, and there’s now a price in dollars?,” she wondered.

She quit her job as a school teacher which paid her in local currency, the value of which has decreased by more than 98% against the dollar on the parallel market since 2019.

That’s when the economy began unravelling after decades of unsound financial policies and alleged corruption.

To solve the exchange rate confusion, the government needs to implement one unified rate. This is among pre-conditions set by the International Monetary Fund nearly a year ago for Lebanon to get a $3 billion bailout.

But the lender of last resort says reforms have been too slow. They have met resistance from politicians who are shielding vested interests and dodging accountability.

In the meantime, the country has been moving towards a cash-based and dollarized economy given spiralling inflation and restrictions by banks on transactions.

Shop owner Mahmoud Chaar told Reuters the exchange rate was changing so fast that his business was losing money overnight.

Like many business owners, Chaar has to pay in U.S. dollars to import goods but sells in Lebanese pounds. One day, he had sold all his goods based on one rate but woke up the next to find it had jumped nearly 10,000 pounds per U.S. dollar.

“Basically, we lost in the exchange rate difference what we had made in profit,” Chaar told Reuters.

Economist Samir Nasr said the varying rates across sectors were making personal accounting “messy” for Lebanese and unifying them was more urgent than ever.

“What is required is a full group of reforms and steps that will allow for the economic situation to stabilize in general – and would then allow the exchange rate to be unified,” he said.
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The collapse of Silicon Valley Bank has caused panic not just in the U.S. tech industry but also in China, where the bank has been a key player for years among Chinese startups.

In recent days, many startups in China have issued statements to reassure their investors that their deposits with SVB will not impact their operations.

Before the bank failed and was taken over by U.S. regulators this month, Silicon Valley Bank was the 16th-largest American bank. In foreign markets, SVB’s reputation for financing about half of all U.S. venture-backed technology and health care companies made it a popular choice for companies, including those based in China and backed by U.S. venture capitalists.

BeiGene, one of China’s largest biotech companies that specializes in the development of cancer drugs, said that the collapse of SVB would have “no major impact” on its operations, and that its uninsured cash deposits in Silicon Valley Bank totaled only $175 million, or about 3.9% of its cash and other investments.

Zai Lab, a biopharmaceutical company headquartered in Shanghai, issued a statement saying that SVB’s collapse would have no impact on its operations, including the ability to pay wages and make payments to third parties.

Other startups, including Andon Health, Sirnaomics, Everest Medicines and Jacobio Pharma, have issued similar statements.

After SVB failed, the Biden administration stepped in and ensured that all customers would be able to get their deposits back, even those who had more than $250,000 in their accounts. That’s the maximum amount that the Federal Deposit Insurance Corporation typically covers when a bank fails, but more than 90% of Silicon Valley Bank accounts were above that amount.

With their SVB deposits frozen, many companies could have been at risk of failing themselves, so the Biden administration said it would step in to guarantee they would get their funds back.

FDIC reimbursements for Chinese customers?

On Chinese social media, there has been concern that the reimbursements may apply only to customers in America.

“Is it true that only depositors who are U.S. citizens can get their money back? What about us?” asked one post on Weibo, the Chinese version of Twitter.

William Hanlon, a partner at Seyfarth Shaw LLP, told VOA Mandarin in an email that the FDIC as receiver “will not categorize account holders by nationality” and “will treat all depositors equally based on their status as depositors.”

David M. Bizar, another partner at Seyfarth Shaw, said the FDIC is continuing to operate SVB as a full-service bridge bank while it searches for buyers of the bank’s assets.

“It can be expected that the United States will continue to maintain these deposit accounts and keep them from losing their value so long as it maintains them in its receivership, and that the FDIC as receiver will not sell these deposit accounts to purchasers who would be permitted under the sale agreements to reduce their values after the transfers,” he told VOA.

So far, several Chinese companies have publicly said they were able to withdraw all their deposits at SVB.

SVB’s role in China

The now-failed SVB carved out a unique role in the Chinese banking scene. It served roughly 2,200 clients and advised government regulators who were eager to build the country’s tech sector. The Santa Clara, California-based bank supported startup companies that not all banks, especially the big commercial ones in China, would accept because of higher risks.

In 2010, then-CEO Ken Wilcox brought the entire board of directors to China to showcase the importance he attached to the China market, according to Chinese media reports. In a 2019 interview, when he was SVB’s chief credit officer, he said SVB was “a model bank for China.”

SVB approached China in two different ways. One involved wholly owned operations in major tech centers, including Beijing, Shenzhen and Shanghai, where it advised startups on how to manage overseas funding. The other involved a 50-50 joint-venture with Shanghai Pudong Development Bank, also known as SPD Silicon Valley bank, that operates under a similar model as SVB.

Following the collapse of SVB, the Chinese policymakers signaled stricter oversight to improve financial market security.

The South China Morning Post quoted Liu Xiaochun, deputy director of the Shanghai Finance Institute, as saying it was inappropriate to set up a similar specialist bank in China.

He argued that to avoid potential losses in supporting tech and health startups, large commercial banks should establish branches to finance innovation, while managing risk exposure at headquarters.
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China’s central bank on Friday announced a cut to the amount of cash banks are required to hold in reserve for the first time this year, in a move designed to shore up an economy weakened by the pandemic.

The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio by 0.25 percentage point starting March 27, which would allow commercial banks to lend more to businesses.

This would bring the weighted average reserve requirement ratio for financial institutions to around 7.6%, the central bank said.

The PBOC said the latest cut was intended to “improve the level of service to the real economy.”

The rate was last cut in November, when the world’s second-largest economy was heavily hit by strict COVID-19 curbs.

China is still grappling with the fallout of its zero-COVID policy, which included harsh lockdowns and mass business closures, hitting supply chains and employment.

The country has set an economic growth target of “around 5%” for 2023, one of the lowest in decades.

Authorities reported a rebound in retail sales in January and February, after the country abandoned zero-COVID controls and a massive exit wave of infections quickly subsided.

But Premier Li Qiang has warned that the growth target was “not easy” to achieve as a grinding property crisis continued and global demand slowed.
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