China’s Monetary Policy Committee Convenes 1st Quarter Meeting, Calls for “Targeted Irrigation”


The monetary policy committee of the People’s Bank of China (PBOC) convened its quarterly meeting on 26 March in Beijing.

According to the meeting the impacts of the novel coronavirus on China’s economy are “controllable overall,” and the “long-term positive trend remains fundamentally unchanged.”

The meeting stressed the need for stable monetary policy that demonstrated foresight and was targeted and counter-cyclical in nature, while also providing vigorous support to efforts to combat the COVID-19 pandemic and restore work and production.

The committee also called for strengthening international coordination of macro-economic policy in order to more effectively respond to the impact of COVID-19 on the global economy. In the committee’s opinion this will include improvements to coordination and guidance mechanisms for fiscal, monetary and employment policy.

Key points for China’s monetary policy in the near-future will include:

  • Using multiple monetary policy tools to maintain rationally ample liquidity and keeping goods prices stable overall;
  • Effectively employing the targeted irrigation function of structured monetary policy tools, making effective use of 300 billion yuan in specialist re-loans, 500 billion yuan in re-loan re-discount specialist quotas and 350 billion yuan in specialist loan quotas from policy banks,
  • Deepen supply-side structural reforms, guiding large-scale banks in “sinking their services centre,” and driving small and medium-sized banks to be accountable for their main business.

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