China cuts interest rate to 6.66%

BEIJING – China's central bank cut interest rates for the third time in just six weeks, moving to shore up investor and consumer confidence as the Chinese economy's once-stellar growth prospects come under an increasingly dark cloud. China moved ahead of a widely anticipated rate cut by the U.S. Federal Reserve, which is meeting Wednesday U.S. time. Other major central banks, including those of Japan, Europe and the U.K. are also expected to further lower borrowing costs in coming days as the impact of the global financial crisis continues to spread. China's benchmark one-year lending rate will fall 0.27 percentage point to 6.66%, while the one-year deposit rate will also drop 0.27 percentage point to 3.60%, the People's Bank of China said in a brief statement. The announcement came after the Shanghai stock market closed down 2.9% Wednesday, amid a string of generally soft third-quarter earnings reports from major companies. In a separate announcement Wednesday, the Ministry of Finance said the government has allocated an additional one billion yuan ($147 million) to support lending to small businesses. The government has been particularly concerned about the plight of small businesses, which account for much employment growth but tend to get hit harder in economic downturns. China's economic growth slowed to 9% year-to-year in the third quarter of this year, a more marked cooling than most had expected. Growth of exports has slowed as demand from the developed countries has weakened, while the domestic housing market is freezing up as many consumers wait for prices to fall before buying. While growth is still extremely fast by the standard of any other country, many economists now expect it to slip to 8% or even below in 2009. China's government has traditionally regarded 8% growth as the minimum necessary to maintain prosperity and stability in a nation undergoing rapid urbanization and social change.