Chinese Central Bank Calls for More Bond Market Reforms, Greater Support for Direct Finance

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The People’s Bank of China (PBOC) has reiterated its commitment to further reform of the country’s bond market in order to expand the role of direct finance in the Chinese economy, amongst a raft of other financial measures highlighted by the central government.

On 11 September PBOC issued the “Notice of the People’s Bank of China Committee on the Progress Situation for the 8th Round of Inspection and Rectification for the 19th Central Committee” (中共中国人民银行委员会关于十九届中央第八轮巡视整改进展情况的通报).

The release of the Notice arrives following inspections conducted by the Chinese central government during the period from 11 October – 20 December 2021, and the provision of feedback to PBOC on 22 February of this year.

PBOC said that in response to the feedback from the inspection team, PBOC had completed 310 rectification measures as of the end of August.

Key rectification measures highlighted by PBOC include:

  • Driving the establishment of 25 province-level local government credit platforms, to alleviate information asymmetries when it comes to finance for micro, small and medium-sized enterprises.
  • Strengthening the foresight, accuracy and coordination of macro-adjustment measures. PBOC highlighted its reduction of the required reserve ratio by 0.25 percentage points on 15 April, unleashing 530 billion yuan in long-term funds, and YoY growth in total social financing, the M2 money supply and the outstanding loan balance by over 10% from January to June.
  • Vigorously supporting and servicing national strategy.
  • Expanding the intensity of services for financial inclusion.
  • Strengthening hidden risk inspections as well as monitoring and early warning.
  • Expediting the stable and healthy development of the real estate market.
  • Accelerating bond market reforms, deepening bond market reforms and vigorously supporting direct finance.
  • Expanding the vigour of financial institution reform – upholding adjustment of reform and regulation to local conditions, and driving the reform of small-scale banks and rural credit societies.