China Will Expand Vigour of Counter-cyclical Measures: Financial Stability and Development Committee


One of China’s top financial authorities has flagged a slew of measures for dealing with the economic fallout of the COVID-19 pandemic.

The Financial Stability and Development Committee (FSDC) convened its 26th meeting on 15 April, where it stressed the need for “expanding counter-cyclical vigour” in order to deal with the impacts of the COVID-19 pandemic.

According to FSDC China will “simultaneously act in terms of total quantity and structure, exert itself at both the supply ad demand end, and implement various policies and measures to support the growth of the real economy, and micro, small and medium-sized enterprises especially.”

The Chinese central bank also stressed the need for strengthen counter-cyclical measures at its 2020 work meeting.

Since the start of 2020 the People’s Bank of China (PBOC) has unveiled three targeted cuts to the required reserve ratio (RRR), as well as cut rates for key open market instruments including the medium-term lending facility (MLF) and reverse repos.

The latest RRR cut, schedule for implementation on 15 April and 15 May, is expected to unleash 400 billion yuan in long-term funds via a cumulative reduction of 1 percentage point for smaller lenders.

On 7 April PBOC also reduced the interest rate for excess reserves held with the central bank from 0.72% to 0.35%.

At its 26th meeting FSDC also said that it would strengthen measures to protect capital market investors, raise the quality of listed companies, ensure the accuracy, completeness and timelines of information disclosures, and better employ the role of capital markets in serving China’s real economy and investors.

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