PBOC’s Monetary Policy Meeting Calls for Greater Support for Small Businesses and Low Carbon Growth

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The latest meeting of the Chinese central bank’s Monetary Policy Committee has stressed the need for greater financial inclusion and channelling more funds towards small businesses.

On 29 June the People’s Bank of China (PBOC) announced via its official website the conclusions of its second quarter meeting of its Monetary Policy Committee held on 24 June in Beijing.

The meeting called for “guiding financial institutions to expand support for micro-and-small enterprises, tech innovation and green development.”

More specific measures include “structural monetary policy tools actively playing a multiplier role; expanding the vigour of support for financial inclusion micro-and-small loans, supporting micro, small and medium-sized enterprises in stabilising employment, and effectively using specialist re-loan and carbon-emissions reduction support tools to support clean and high-efficient usage of coal,as well as tech innovation, inclusive pensions and transport and logistics.”

The second quarter meeting of PBOC’s Monetary Policy Committee remained consistent with the first quarter meeting with regard to phrasing on other themes, including:

  • A focus on the stabilisation of both employment and prices.
  • The theme of stable monetary policy.
  • Continuing to employ the advantages of both quantitative and structural tools.
  • Fully unearthing the potential of interest rate reforms.
  • Guiding financial institutions to rationally reduce the overall financing costs for the real economy.
  • A focus on support for financial inclusion, green development, the manufacturing sector and infrastructure development.

“The wording of the second quarter policy meeting was more active – mainly because since the second quarter, China’s economy has faced multiple severe factors whose influence has exceeded expectations,” said Zhou Maohua (周茂华), macro-researcher with Everbright Bank, to National Business Daily.

“Stable monetary policy needs to moderately expand the vigour of support for the real economy, and reduce the damage caused by the pandemic to a minimum.

“The healthy development of micro-and-small enterprises has major significance for stabilisation of employment, the protection of livelihoods and industrial upgrade in China…since the second quarter certain sectors and micro-and-small enterprises have experienced shock.

“Financial institutions must be guided to expand the vigour of support for micro-and-small enterprises overcoming difficulties, in order to stabilise employment, and drive the accelerated recovery of domestic demand.”