Chinese Central Bank Outlines Monetary Policy Goals Following Release of State Council’s Economic Stabilisation Plans


The People’s Bank of China (PBOC) has outlined its near-term monetary policy goals following the release of a raft of ambitious policies by the State Council for the purpose of stabilising the Chinese economy.

At the start of June the State Council released the “Raft of Measures and Policies to Firmly Stabilise the Economy” (扎实稳住经济的一揽子政策措施), containing a total of 33 measuring covering 6 policy areas.

The State Council said that the goal of the new policies is to shore up China’s economic performance amidst the uncertainty created by the ongoing Covid pandemic, as well as heightened geopolitical tension and military conflict in Ukraine.

On 2 June PBOC held a press conference to clarify its monetary policy orientation following the release of the Raft of Measures and Policies.

Pan Gongsheng (潘功胜), PBOC deputy governor and the head of the State Administration of Foreign Exchange (SAFE), said that the Chinese central bank would “expand the implementation vigour for stable monetary policy,” focusing on the following areas in particular:

  1. Strengthening the stability of growth in overall credit. Making comprehensive usage of multiple types of monetary policy tools to expand the vigour of liquidity injection and maintain total volumes of liquidity that are rationally ample.
  2. Highlighting key areas for financial support. Expanding the vigour of support for financial inclusion micro-and-small loans. Starting from the second quarter of 2022 PBOC increased the incentive funds ratio from 1% to 2% for financial inclusion micro-and-small loan support tools.
  3. Continuing to drive declines in the cost of enterprise financing. Deepening loan prime rate (LPR) reforms, making effective use of the guidance role of LPR, implementing adjustment mechanisms for the marketisation of deposit rates, stabilising bank liability costs, and driving declines in interest rates for enterprise loans.