New Delhi. There is bad news for the Indian stock market. The Chinese government has given government incentives for the Chinese stock market. This can increase investment in the Chinese stock market from different markets. China's central bank, the People's Bank of China (PBOC), has injected $70 billion in cash into the money markets this month through a new policy tool. This step has been taken to overcome the liquidity shortage in China's weak economy and to encourage banks to lend money.

The People's Bank of China entered into 'outright reverse repurchase agreements' worth 500 billion yuan in October to maintain adequate liquidity in the banking system. The bank gave this information in a statement on Thursday. These agreements are for 6 months.

Allows to buy different types of securities from primary dealers
This is the first time the PBOC has disclosed the use of this new tool, which was introduced this week. The program allows the purchase of different types of securities from primary dealers, including sovereign bonds, local government notes, and corporate debt.

This new tool will help inject cash for a longer duration than the PBOC's current 7-day reverse repo. The injection helps banks cope with the net withdrawal of liquidity of 481 billion yuan through the PBOC's one-year policy loan in the past 3 months. This comes at a time when financial pressure on lenders has increased as savings deposits have fallen and money has been diverted from low-yielding debt instruments to stocks.

China will issue government debt.
Ensuring adequate liquidity in the market is important to help the economy. China is expected to issue more government debt as part of the stimulus package, which could reduce liquidity from the interbank market.