China is injecting $188 billion into its economy as the Evergrande crisis comes to a head

• China's central bank is injecting $188 billion into a faltering economy to support lending.
• It comes after struggling real-estate giant Evergrande said there's "no guarantee" it can meet debt repayments.

Beijing is stepping in to prop up China's faltering economy just as real-estate giant Evergrande's crisis comes to a head.

On Monday, the People's Bank of China (PBC) said it would inject 1.2 trillion yuan ($188 billion) into the economy to support business and household lending. It will do this by cutting the "reserve requirement ratio," or the amount of cash banks must hold in reserve, by 50 basis points from December 15.

The action was a "convenient, if not coincident, cushion for Evergrande's looming debt default," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said.

Debt-laden real estate giant Evergrande said last week there was "no guarantee" it would have enough funds to meet debt repayments. This triggered coordinated responses from regulatory authorities seeking to reassure investors that the fallout would be contained and that the government is stepping in to help.

Beijing followed up the central bank's action Tuesday with a statement from a meeting of its top leaders that emphasized "growth stability," according to the Xinhua state news agency. Analysts are scrutinizing the language in the statement and pouncing on the government's highlight of "stability" as the top economic priority for 2022.

Nomura's China economists Ting Lu and Jing Wang said the words point to "Beijing's increasing concerns about the growth slowdown."

Chinese leaders also said the country would focus on promoting the healthy development of the property sector next year. It pledged to boost the affordable housing supply and to support the private housing market to meet reasonable needs, Xinhua reported.

"If this materializes, it could be a positive piece of news as it might correct many of these market-distorting curbs," the Nomura economists said.

The moves come as China's economy has slowed in recent months, with growth slower than expected in the third quarter. The country is also facing an energy shortage and a resurgence in COVID-19 cases that may derail growth.

Monday's action, in particular, "suggests to us that the debate within China over whether and how much to ease seems to have been finally won by those seeking quick economic relief and who advocate that structural issues such as excessive leverage be given lower priority for now," economist Nigel Chiang of Centennial Asia Advisors said in a note published on the Smartkarma platform.

"The economy must have turned out to be weaker than the leaders had expected, tilting the view of the balance of risks towards worrying more about growth," he added.

Chiang said he expects more easing measures in the weeks ahead as China seeks to bolster its economy.

China has been cracking down on its red-hot property market. Last year, authorities put new limits on how much banks can lend to the property sector, contributing to the sector's cash crunch that many now worry may spill over into the broader global economy.