Monetary policy to be more precise, effective

By Zhou Lanxu (Chinadaily.com.cn) 08:55, October 23, 2023

File photo shows an exterior view of the People's Bank of China in Beijing. [Photo/Xinhua]

China will implement a sound monetary policy that is more precise and effective, keeping steady credit expansion and encouraging financial institutions to further reduce real lending interest rates, said a report from the State Council on financial work.

Enterprises' comprehensive financing costs and individuals' consumption credit costs will be alleviated while order of the deposit and loan market will maintained, Pan Gongsheng, governor of the People's Bank of China, the country's central bank, said while delivering the report, which was submitted on Saturday for deliberation at a session of the Standing Committee of the National People's Congress.

The financial system will make continuous efforts to better serve the real economy, Pan said, including beefing up support for the delivery of pre-sold housing units and strengthening financial services for private enterprises, advanced manufacturing sectors, strategic emerging industries and technology enterprises.

According to the report, progress has been made in alleviating market entities' financing costs this year. The weighted average interest rate of corporate loans in September was 3.82 percent, the lowest in history, while the interest rate of new individual mortgages in the first nine months stood at 4.13 percent on average, down 0.88 percentage points year-on-year.

Official data also shows that 22 trillion yuan ($3 trillion) in existing mortgages have had interest rates reduced so far, with an average interest rate reduction of 0.73 percentage points, benefiting about 50 million households and 150 million people.

Interest expenses worth 160 billion yuan in total are saved per year, which means that each household saves 3,200 yuan per year on average.

Pan, while delivering the report, also pledged to proactively address financial risks, with a mechanism to be established to resolve the debt risk of local government financial vehicles (LGFVs). Financial institutions will be guided to support LGFV risk resolution according to laws and regulations.

"Reasonable financing needs of real estate enterprises will be supported without discrimination to keep the financing of the real estate sector stable," Pan said.

Efforts will also be made to promote the internationalization of the renminbi in a proper and orderly manner and establish a risk alert and control system for overseas investments to maintain the safety and stability of the country's foreign exchange reserves, he said.

The latest report was part of the continuous policy signals that the PBOC is poised to consolidate the country's economic recovery that has picked up. During a meeting of the International Monetary and Financial Committee in Marrakech, Morocco, last week, Pan said positive factors in China's economic performance have increased with an uptick in industrial production, services activity and market sales.

The country's monetary policy will provide continuous support and ride the improvement in economic momentum, with aggregate and structural monetary tools to be better leveraged to expand domestic demand, boost expectations and provide more substantial support for the real economy, according to Pan.

China will also pay more attention to the balance between economic growth, sustainability and actively promote high-quality as well as sustainable development while maintaining a reasonable growth rate, he added.

(Web editor: Tian Yi, Liang Jun)


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