Chinese Central Bank Flags More of the Same for Monetary Policy in 2021, No “Irrigation-style” Flooding


A senior offical from the People’s Bank of China (PBOC) has flagged the maintenance of moderate monetary policy settings in the wake of the COVID-19 pandemic.

in an essay published by PBOC’s official news outlet Sun Guofeng (孙国峰), head of PBOC’s monetary policy department, wrote that China would “maintain the continuity, stability and sustainability of [monetary] policy.”

“[China] needs to both maintain the required vigour of support for economic recovery, as well as avoid flood-style irrigation.”

Sun also called for other measures including:

  • Improving long-term effective mechanisms for PBOC to adjust the liquidity, capital and interest rate restraints on monetary creation by banks.
  • Comprehensive usage of multiple monetary tools including reserve ratios, re-loans, re-discounts, medium-term lending facilities and open market operations.
  • Maintenance of rationally ample liquidity.
  • Use of multiple channels to supplement the capital of banks.
  • Employing the incentive and restraint role of macro-prudential assessments.
  • Maintaining an essentially coordinated pace between growth in the money supply and total social financing with nominal economic growth.