China’s central bank said on Thursday that it was looking into creating more structural tools to support innovation, domestic consumption and exporters, as it strives to help the Chinese economy ride out a period of heightened global uncertainty.
Pan Gongsheng, governor of the People’s Bank of China (PBOC), also reiterated pledges to cut interest rates and the reserve requirement ratio (RRR) for commercial banks to boost economic growth during the meeting.
Meanwhile, the bank will keep the yuan stable and manage financial risks amid the pressure being exerted by external tariffs, Pan added.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
“We will utilise a range of monetary policy tools, including open market operations, to ensure ample liquidity and align money supply and social financing growth with economic and inflation targets,” he said.
Pan did not elaborate on the new tools the PBOC may introduce, but the bank has turned to relending tools to support various sectors of China’s economy in recent years.
Just last week, the PBOC announced plans to double the size of its relending tool to support the technology sector to 1 trillion yuan (US$138 billion) during the “two sessions”, the annual meeting of China’s top legislative and consultative bodies.
The moves are in line with Beijing’s decision to shift China’s monetary policy from a “prudent” to a “moderately loose” stance for 2025, as policymakers focus on stimulating consumption.
Domestic consumption has remained sluggish for over two years, prompting officials to lower this year’s inflation target to 2 per cent. The consumer price index fell 0.1 per cent during the first two months of the year, underscoring the need for stronger action.
The supportive monetary policy is also being used to counter external pressures on exports, following US President Donald Trump’s decision to hike tariffs on Chinese goods by 20 per cent.
Last week, Premier Li Qiang outlined plans to issue an additional 300 billion yuan in ultra-long special treasury bonds and lift the fiscal deficit by a percentage point to 4 per cent to make room for more growth-boosting measures.
During the two sessions, Pan noted there was “ample room” for further RRR and interest rate cuts, a pledge he also made in December.
China introduced two RRR cuts last year, each of 0.5 percentage points, injecting 1 trillion yuan of liquidity into the market. The average RRR in China currently stands at 6.6 per cent.
At Thursday’s meeting, the PBOC also said it would strengthen support for the capital market, provide financial help to institutions to address local debt risks, and enhance the real estate financial system through improved macroprudential management.
The central bank said it would maintain the stability of the yuan by letting the market play a decisive role in setting exchange rates and boosting market expectations through improved policy transparency.
“We’ll advance the renminbi’s internationalisation in a steady and measured way, gradually opening up financial services and markets in an orderly manner,” Pan said.
More from South China Morning Post:
For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
