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Chinese Court Lowers Interest Rates Allowed on Private Loans

General Views Of Shanghai As The Yuan Drops
Photographer: Qilai Shen/Bloomberg

China’s Supreme Court ordered interest rates on private loan agreements between individuals and small businesses to be lowered by as much as 10 percentage points, a ruling it said will foster economic growth and stabilize the sector.

Under a revised ruling passed this week, rates exceeding four times the benchmark Loan Prime Rate will be treated as usury and invalid, the Supreme People’s Court said Thursday. Based on the latest LPR, the ceiling would be lowered to 15.4% from a range of 24% to 36% under a previous judicial interpretation in 2015.