Chinese Central Bank Stresses Increase in “Direct Reach” of Monetary Policy


The People’s Bank of China (PBOC) has emphasised the need to raise the impact of its monetary policy mechanisms and tools.

PBOC’s Monetary Policy Committee recently convened its second quarter regular meeting in Beijing, according to a report from the state-owned Economic Information Daily published on 29 June.

The Meeting called for “innovation and improvement of macro-economic controls, more flexible moderation of stable monetary policy, and greater emphasis on support for the real economy’s return to sustainable development.”

Distinct from the first quarter meeting, PBOC placed greater stress on “upholding total quantitative policy moderation, expediting positive feedback between finance and the real economy, and supporting effective performance of ‘Six Stabilisation’ and ‘Six Protection’ work with full vigour.”

PBOC also emphasised the need to increase the “direct reach” of monetary policy via the effective use of new tools, such as one trillion yuan in financial inclusion re-loan and re-discounting quotas and other “direct real tools.”

The goal of these measures is to “support qualified regional banks in deferring repayments for or providing credit loans to micro and small-enterprises (MSE).”

Wang Qing (王青), macro-economic analyst with Golden Credit Rating, said that Chinese monetary policy was making the gradual transition from emphasis on “rescue from emergency and relieving difficulty” during the COVID-19 outbreak, to greater focus on balancing the stabilisation of growth and maintaining employment on the one hand, and structural adjustment and risk prevention on the other.

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