China's Central Bank Pledges Counter-Cyclical Policy Support

The People's Bank of China (PBOC) reaffirmed its commitment to a moderately loose monetary stance, signalling plans to prepare incremental counter-cyclical measures in close coordination with fiscal policy. According to the central bank's second-quarter monetary policy report, financing costs reached historically low levels, with newly issued corporate and residential mortgage rates averaging around 3 percent. Targeted credit programs—particularly in high-tech, green development, digital economy, and elderly care sectors—continued to expand faster than overall loan growth, while an 800 billion yuan relending balance supported small and medium-sized private enterprises.

The central bank's policy execution report confirms that monetary authorities intend to keep liquidity ample and financing conditions accommodative to sustain economic recovery. By explicitly mentioning preparation for incremental policies alongside fiscal coordination, the PBOC signals readiness to step up counter-cyclical interventions if domestic demand remains sluggish.

China's central bank affirmed that it will maintain an accommodative monetary environment and design new incremental policy measures to bolster domestic demand, according to the People's Bank of China's second-quarter monetary policy implementation report published by state media. The PBOC stated that total social financing and broad money supply (M2) growth continued to outpace nominal gross domestic product growth during the first half of the year. Comprehensive financing costs hovered around historic lows, with interest rates on newly issued corporate loans and individual residential mortgages averaging approximately 3 percent. To manage liquidity, the central bank actively deployed reverse repos, the medium-term lending facility (MLF), and treasury bond trading operations. It also reduced the interest rates on structural monetary policy tools by 25 basis points and implemented a one-time credit restoration policy for eligible borrowers with overdue accounts. Credit allocation continued to shift toward priority sectors. By the end of June, lending growth in targeted categories consistently outpaced the expansion of total bank loans. Loans to the elderly care industry grew by 23.5 percent year-on-year, followed by digital economy industry loans at 15.1 percent, green loans at 14.5 percent, technology loans at 12.6 percent, and inclusive loans at 7.8 percent. Addressing persistent financing challenges for the private sector, the PBOC noted that the 1 trillion yuan private enterprise relending facility established earlier in the year reached an outstanding balance of approximately 800 billion yuan by the end of July. Weighted average interest rates on newly issued loans to micro, small, and medium-sized private enterprises fell by 40 basis points compared to the same period last year, benefiting roughly 2.5 million market entities. Looking ahead, the central bank indicated it will flexibly adjust its policy toolkit in response to domestic and global economic conditions. The PBOC emphasized strengthening coordination with fiscal policy, maximizing the effectiveness of existing measures, and rolling out practical incremental policies to reinforce counter-cyclical adjustments.