China creates a suitable financial environment for stable growth

According to Agence France Presse on January 5th, the People's Bank of China has outlined a "moderately loose monetary policy" aimed at expanding domestic demand to promote economic growth, and the Chinese government has recently stated that it will adopt a more proactive macroeconomic policy

Chinese officials have previously disclosed a series of measures to promote economic growth, including lowering interest rates and relaxing real estate purchase restrictions

It was reported that the People's Bank of China said in a statement that it would "implement moderately loose monetary policy and create an appropriate monetary and financial environment for stable economic growth"

The statement released on January 4th reiterated the plan to lower interest rates and reserve requirements

The statement stated that the reserve requirement ratio and interest rate cuts will be made at the appropriate time based on the domestic and international economic and financial situation and the operation of the financial market

The People's Bank of China also stressed that corruption must be eliminated, which means that China will continue to fight against corruption in the financial field

It also stated that it will continue to do a good job in resolving debt risks of local government financing platforms through financial support

The statement stated that these measures aim to "prevent and resolve financial risks in key areas, further deepen financial reform and high-level opening-up, focus on expanding domestic demand, stabilizing expectations, and stimulating vitality"

It was also reported on the Bloomberg News website on January 4 that the People's Bank of China said that as part of its efforts to promote economic growth, the People's Bank of China would further increase its financial support for scientific and technological innovation and consumption promotion

The People's Bank of China also promised to explore normalized institutional arrangements and maintain the stable operation of the capital market. In the statement on the 2025 People's Bank of China Working Conference released on the People's Bank of China's website on the 4th, the People's Bank of China reiterated that it would "cut reserve requirements and interest rates at an appropriate time" to promote economic growth

According to reports, at the end of September 2024, China launched a comprehensive package of incremental policies, and since then, the Chinese economy has shown signs of recovery. However, due to the possibility of a new trade war with the United States, China's economic growth prospects remain challenging. The Chinese government has stated that it will take a more proactive stance on liquidity issues by 2025

In addition, according to a statement released on the website of the State Administration of Foreign Exchange of China, the country's foreign exchange regulatory agency stated on the 4th that it will guide "high-quality foreign capital" to invest in high-tech industries within China

The State Administration of Foreign Exchange of China also stated that the Chinese government will optimize the management of overseas listed funds for domestic enterprises and continue to improve the policy of multinational corporations' fund pools

In addition, according to a report on the website of Singapore's Lianhe Zaobao on January 5, the People's Bank of China proposed to maintain the stable operation of the capital market and hold the bottom line against systemic financial risks

It is reported that on January 4, the People's Bank of China announced that the 2025 People's Bank of China Working Conference was held from January 3 to 4, which proposed a number of key tasks in 2025, including making full use of two structural monetary policy tools to support the capital market, exploring normalized institutional arrangements, and maintaining the stable operation of the capital market

The meeting proposed to implement a moderately loose monetary policy to create a suitable monetary and financial environment for stable economic growth; Coordinating the five major financial articles to better serve high-quality economic development; Give full play to the macro prudential and financial stability functions of the central bank, and hold the bottom line of preventing systemic financial risks from occurring; Steadily promote financial reform and opening up, and enhance the internationalization level of the Renminbi; Deeply involved in global financial governance and cooperation; Further optimize the financial management and services of the central bank

The meeting stated that it is necessary to comprehensively use various monetary policy tools, based on the domestic and international economic and financial situation and the operation of the financial market, choose opportunities to lower reserve requirement ratios and interest rates, maintain sufficient liquidity and stable growth of financial aggregate, so as to match the expected targets of economic growth and overall price level with the growth of social financing scale and money supply. Better grasp the relationship between stock and increment, focus on revitalizing stock financial resources, and improve the efficiency of fund utilization. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and resolutely guard against the risk of exchange rate overshoot

The meeting proposed to scientifically use structural monetary policy tools, optimize the tool system, strengthen coordination with fiscal policy, and further increase financial support for technological innovation and consumption promotion in accordance with the principles of "focusing on key areas, reasonable moderation, and both progress and retreat". Actively expanding financing channels, supporting enterprises to raise funds through markets such as bonds and equity, and improving the quality and efficiency of financial services

The meeting also mentioned continuing to do a good job in resolving debt risks of local government financing platforms through financial support. Improve and strengthen macro prudential management of real estate finance, and support the construction of a new model for real estate development