Chinese Central Bank Governor Stresses Stability, Servicing China’s Real Economy in 2022


The head of the People’s Bank of China (PBOC) has signalled a commitment to stable monetary policy in 2022, as well as efforts to further ensure that the Chinese financial sector more effectively services the real economy.

“In 2022, the People’s Bank of China will further strengthen the ability of finance to service the real economy,” said Yi Gang (易纲) in an interview with state-owned media. “This will mainly be embodied in the form of the ‘three stabilities.’

“The first is stable growth in the total volume of money and lending, and keeping growth in the money supply and total social financing fundamentally on par with nominal economic growth.

“The second is stable optimisation of the financial structure. Since the start of this year financial inclusion micro-and-small loans have already provided support to more than 42 million micro-and-small businesses.

“The next step will be for the People’s Bank of China to engage in targeted policy implementation, and guide financial institutions to expand support for the real economy – in particular micro-and-small enterprises, tech innovations and green development – and support for high-quality development.

“The third is reductions in overall financing costs amidst stability.

“This year average interest rates for business loans have already fallen to less than 5%, which is a new low since the keeping of records. The next step is for the People’s Bank of China to improve market-based interest rate formation and transmission mechanisms, employ the effects of reform of loan market interest rate quotes, and drive reductions in overall financing costs for businesses amidst stability.”

Yi Gang said that PBOC would make use of “direct-reach instruments” in order to achieve the goals of better supporting the real economy and driving growth in financing for small businesses.

“One of these is support tools for micro-and-small enterprises – from 2022 to the end of June 2023, PBOC will provide micro-and-small enterprise and individual industrial and commercial registrant loans to local legal person banks, and provide funds according to a quota increase of 1%, encouraging them to increase financial inclusion micro-and-small loans.

“The second is to include financial inclusion micro-and-small loans in re-loan support plan management. The 400 billion yuan reloan quota originally used to support micro-and-small financial inclusion lending can be rolled over, and when necessary the reloan quota may be further increased.”

With regard to China’s carbon reduction policy, Yi said that PBOC would make haste to unveil new financial support tools.

“Financial support for peak carbon and carbon neutrality is important work for the People’s Bank of China,” said Yi.

“In November, PBOC launched two specialist instruments to support peak carbon and carbon neutrality. The first is a carbon emissions reduction support tool, to support the three key areas of clean energy, energy conservation and environmental protection, and carbon emissions reduction technology.

“The other is specialist reloans to support the high-efficiency usage of clean carbon, and seven areas including clean carbon production and clean burning technology.”

Yi Gang also stressed the success of ongoing efforts to contain systemic risk in the Chinese financial system.

“Since 2018 the People’s Bank of China has worked with relevant departments and local governments to prevent and dissolve major financial risk, obtaining phase-based success,” said Yi.

“At present, China’s financial system is operating stably overall. Financial risk has contracted in general and is controllable.

“Firstly, the trend of continued increase in the macro-leverage ratio has been effectively contained. In 2022 there was phase-based increase with the shock of the pandemic – since the start of this year this has already fallen back to the path of fundamental stability.

“Secondly, there has been orderly disposal of a raft of outstanding risk. Shadow banking, poor handling of finance, illegal fund-raising and other forms of risk have been effectively contained. Stronger financial regulation and strengthened anti-trust measures have obtained results.

“Thirdly, there has been stronger systemic prevention and dissolution of financial risk. We have further improved the macro-prudential policy framework, financial infrastructure regulation, comprehensive financial accounting and other systems, and the efficiency and risk resistance capability of financial markets has markedly strengthened.”