Chinese Central Bank Highlights Ongoing Use of Structured Monetary Policy Tools

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The People’s Bank of China (PBOC) has highlighted its use of structured monetary policy tools to guide and channel the extension of credit in the Chinese economy.

“Stable monetary policy will set off from the combined vantage point of effectively coordinating growth in domestic demand and supply-side structural reforms,” said PBOC deputy governor Xuan Changneng (宣昌能) on 13 January, at a press conference for the release of 2022 financial data.

According to Xuan, PBOC will “make effective use of the guidance role of structured monetary tools; and continue to make effective use of carbon reduction support instruments, tech innovation and other special loans to support the accelerated development of a modern industrial system.”

Zou Lan (邹澜), the head of PBOC’s monetary policy department, said that structured monetary policy will “focus on key areas, be rational and moderate, and both advance and retreat.”

As of the end 2022, China’s structured monetary policy tool balance was around 6.4 trillion yuan. Zou said that the tools had “played a positive role when guiding financial institutions in the rational provision of loans; expediting the focused diverting of financial resources to key areas and weak linkages; maintaining stable growth in the money and loan supply, and stabilising the fundamentals of the macro-economy.

“PBOC has also recently researched and unveiled several other structured tools whose main focus is supporting the stable operation of the real estate market, including loan support plans to ensure project delivery, support plans for residential leasing loans, and support tools for private enterprise bond financing.”

Xuan said that in 2023 PBOC will also “effectively deploy preferential policies including financial inclusion micro-and-small support loans; effectively support development of key infrastructure and major projects in energy, transit and water; strengthen financial services for real village revitalisation, and drive a dynamic high-level balancing of effective supply and effective demand.”