BEIJING, Sept 24, 2024 (BSS/AFP) - China's central bank on Tuesday unveiled a raft of measures to boost the country's struggling economy, cutting the amount of cash banks must hold in reserve and lowering a key interest rate.

China's economy, the world's second-largest, has yet to achieve a highly anticipated post-pandemic recovery as it is battered by a prolonged property sector debt crisis, continued deflationary pressure and high unemployment.

The country's leadership has set a goal of five percent growth in 2024, an objective analysts say is optimistic given the headwinds the economy is facing.

On Tuesday, central bank chief Pan Gongsheng told a news conference in Beijing that it would cut a slew of rates in a bid to boost growth.

China will "reduce the reserve requirement ratio and the policy interest rate, and drive the market benchmark interest rate downward", Pan said.

"The reserve requirement ratio will be cut by 0.5 percentage points in the near future," he said.

The move will inject around a trillion yuan ($141.7 billion) in "long-term liquidity" into the financial market, he said.

Beijing would "lower the interest rates of existing mortgage loans and unify the down payment ratios for mortgage loans", he added.

It will also "guide commercial banks to lower the interest rates of existing mortgage loans to the vicinity of the interest rates of newly issued loans".

Shares in Hong Kong and Shanghai rallied at the open Tuesday after China unveiled the measures.

Property and construction have long accounted for more than a quarter of China's gross domestic product, but the sector has been under unprecedented strain since 2020, when authorities tightened developers' access to credit in a bid to reduce mounting debt.

Since then, major companies including China Evergrande and Country Garden have teetered, while falling prices have dissuaded consumers from investing in property.

Beijing has unveiled a number of measures aimed at boosting the ailing sector, including cutting the minimum down payment rate for first-time homebuyers and suggesting the government could buy up commercial real estate.

Adding further strain, local authorities in China face a ballooning debt burden of $5.6 trillion, according to the central government, raising worries about wider economic stability.

Speaking alongside the central bank chief Tuesday, Director of the National Administration of Financial Regulation Li Yunze said Beijing will "actively cooperate in resolving real estate and local government debt risks".

"China's financial industry, especially large financial institutions, is operating stably and risks are controllable," he insisted.

"We will firmly maintain the bottom line of preventing systemic financial risks," he added.