The People's of Bank of China (PBOC), the country's central bank, outlined its financial support strategies used in the year of 2024 to help step up the country's high-quality economic development.
Speaking at a press conference held in Beijing on Tuesday, Xuan Changneng, deputy governor of the PBOC, introduced the PBOC's supportive monetary policy throughout 2024 with four major adjustments implemented to stimulate economic recovery.
He then said the central bank's efforts were focused on four key areas to provide financial support to high-quality economic development. First was to maintain a stable monetary and credit growth in terms of quantity, said Xuan.
"Various monetary policy tools have been utilized to maintain adequate liquidity and to promote reasonable expansion in social financing and growth in supplies of currency and credit, and guide loan interest rates steadily downward. Last year, the reserve requirement ratio was reduced twice, totaling a decrease of 1 percentage point, alongside a 0.3 percentage point cut in the central bank's policy interest rates, which have been the most significant adjustments in recent years," said Xuan.
The deputy governor then said the PBOC has strengthened its support for key sectors from the structural side.
"A re-loan of 500-billion-yuan (about 68.2 billion U.S. dollars) has been established to promote sci-tech innovation and technological transformation to effectively guide financial institutions to increase their financial support to first-time borrowers of small and medium-sized tech enterprises and to technological transformation and equipment upgrade projects in key areas. By the end of last year, banks had connected with 22,000 such projects, with 838.9 billion yuan (about 114.4 billion U.S. dollars) in signed loan contracts and waiting for enterprises to withdraw at any time," said Xuan.
"A re-loan of 300-billion-yuan (about 40.9 billion U.S. dollars) for affordable housing was launched. The lower limit on mortgage rates was removed, while efforts were made to lower mortgage rates for unsold second-hand commercial housing, which have saved borrowers approximately 150 billion yuan (about 20.5 billion U.S. dollars) in mortgage interest payments annually. Both supply and demand sides have simultaneously supported the stable and healthy development of the real estate market. Also, two capital market support tools were also introduced to effectively improve capital market expectations," Xuan added.
He also noted that the PBOC has worked to enhance the transmission of policy rates. As for foreign exchange, the PBOC has worked to stabilize the yuan to ensure the currency remains within a reasonable range, added Xuan.
"Overall, the monetary policy for 2024 has shown promising results. The financial output scored reasonable growth, with a year-on-year growth of 8.0 percent in social financing by December, alongside a 7.3-percent increase in broad money supply (M2) and a 7.6-percent rise in yuan loans, which all surpassed nominal economic growth rates. Besides, loan interest rates have steadily declined. In December, interest rate on new corporate loans remained at approximately 3.43 percent, down 0.36 percentage points year on year, while personal mortgage rates stayed at around 3.11 percent, a decrease of 0.88 percentage points year on year. The credit structure has also improved, with medium- and long-term loans to the manufacturing sector increasing by 11.9 percent, loans to specialized and sophisticated small and medium-sized enterprises by 13.0 percent, and inclusive loans to micro and small enterprises by 14.6 percent, which all have continued to outpace overall loan growth," said Xuan.
He then introduced how the PBOC provides financial support contributing to this year's high-quality economic development.
"Next, the macroeconomic policies will be further enhanced for counter-cyclical adjustments. We will adjust and optimize the intensity and pace of policies at the right time based on domestic and international economic and financial conditions, as well as the operation of financial markets, to support the achievement of the annual economic and social development goals," said Xuan.
China's central bank outlines financial support strategies adopted in 2024
