China makes promises in new MPR

The People’s Bank of China (PBOC) has revealed that it will continue to use structured monetary policy tools in its latest quarterly monetary policy report. The policy will channel credit towards specific sectors of the economy. The bank will continue to incentivise and guide structural monetary policy tools to provide continuous financial support to agriculture-related areas, micro-and-small enterprises, and private enterprises. The bank will also implement inclusive micro-and-small loan support tools to maintain financial support for micro-and-small enterprises.

The PBOC will make use of technological innovation re-loans and special re-loans for capital equipment upgrade and improvements. The bank will effectively satisfy the credit demand for equipment upgrades and improvements from the manufacturing industry, social services sector, small, medium and micro-enterprises, and individual industrial and commercial registrants. It will combine the implementation of the strategy of expanding domestic demand with deepening supply-side structural reforms and expand the intensity of macroeconomic policies.

The bank will strengthen regulation and control, build a modern central banking system, focus on stabilising growth, employment, and prices, and promote financial support for the real economy to achieve an effective improvement in quality and a reasonable increase in quantity, in order to develop socialism in a comprehensive manner. The Report stated that in 2022, China’s prudent monetary policy achieved positive results, which provided robust support to economic stabilisation and improvement by achieving rational growth in the money supply and credit.

PBOC has also made ongoing improvements to China’s credit structure. As of the end of last year, the balance of financial inclusion micro-and-small loans and medium and long-term loans to the manufacturing industry saw YoY increases of 23.8% and 36.7% respectively. Additionally, the cost of corporate finance and personal consumption credit has stabilised and declined. The weighted average interest rate for corporate loans in 2022 was 4.17%, while the average interest rate for new personal home loans in December was 4.26%.