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E-mail China.org.cn, February 28, 2025
Speakers:
Mr. Xuan Changneng, deputy governor of the People's Bank of China (PBC)
Mr. Li Bin, deputy director of the State Administration of Foreign Exchange (SAFE)
Mr. Zou Lan, spokesperson of the PBC and director general of the Monetary Policy Department of the PBC
Ms. Zhang Wenhong, deputy director general of the Statistics and Analysis Department of the PBC
Mr. Jia Ning, director general of the Balance of Payments Department at SAFE
Chairperson:
Ms. Shou Xiaoli, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO
Date:
Jan. 14, 2025
Shou Xiaoli:
Ladies and gentlemen, good afternoon. Welcome to this press conference held by the State Council Information Office (SCIO), as part of the series "High-Quality Development Achievements of China's Economy." Today, we have invited Mr. Xuan Changneng, deputy governor of the People's Bank of China (PBC), and Mr. Li Bin, deputy director of the State Administration of Foreign Exchange (SAFE), to introduce the financial support for high-quality economic development and answer your questions. Also attending today's press conference are: Mr. Zou Lan, spokesperson of the PBC and director general of the Monetary Policy Department of the PBC; Ms. Zhang Wenhong, deputy director general of the Statistics and Analysis Department of the PBC; and Mr. Jia Ning, director general of the Balance of Payments Department at SAFE.
Now, I will give the floor to Mr. Xuan for his introduction.
Xuan Changneng:
Good afternoon. I am delighted to have this opportunity to meet you all today. Next, I will briefly introduce the situation regarding financial support for high-quality economic development, as well as the work plan going forward.
In 2024, the PBC maintained a supportive monetary policy stance, implementing four significant adjustments to monetary policy to sustain the upward recovery trend and support high-quality economic development. This is mainly reflected in four aspects:
In terms of the overall volume, we have maintained steady growth in monetary credit. By comprehensively utilizing a variety of monetary policy tools, we have ensured that liquidity remains reasonably abundant, promoting reasonable growth in the scale of social financing and monetary credit, and guiding a continuous decline in loan interest rates. Last year, we reduced the statutory deposit reserve ratio twice by a total of 1 percentage point and lowered the central bank's policy interest rates by a total of 0.3 percentage point, both representing the largest adjustments in recent years.
In terms of structure, we have intensified support for key areas. A total of 500 billion yuan has been allocated for technological innovation and technical transformation re-loans, effectively guiding financial institutions in increasing their financial support for first-time tech-oriented small- and medium-sized enterprises (SMEs), as well as for key projects in technological upgrade and equipment renewal projects. As of the end of last year, banks have matched 22,000 projects for marketing purposes, with signed loan contracts totaling 838.9 billion yuan ready for enterprises to draw upon at any time. Additionally, a 300 billion yuan re-lending program for government-subsidized housing was launched, the lower limit on mortgage interest rates has been removed, and efforts have been made to further reduce mortgage interest rates of existing houses, reducing borrowers' annual mortgage interest expenses by approximately 150 billion yuan. This dual approach supports the stable and healthy development of the real estate market. Two support tools for the capital market have also been created, effectively improving expectations in the capital market.
In terms of transmission, we streamlined the channels for the transmission of policy interest rates. The main policy rates have been clarified, gradually smoothing the transmission relationship from short to long-term interest rates. At the same time, we have strengthened the implementation of interest rate policies, addressed the idle flow of funds, vigorously rectified manual interest subsidies, optimized self-regulation of corporate deposits and interbank demand deposit interest rates, thereby reducing banks' interest expenses and creating conditions for reducing social financing costs and balancing sustainable bank development.
In terms of the exchange rate, the RMB exchange rate has remained basically stable at a reasonable and balanced level under complex circumstances. We have adhered to the market's decisive role in forming exchange rates, effectively utilizing the regulatory functions of the exchange rate on macroeconomics and the balance of payments. Meanwhile, through comprehensive measures, stabilizing expectations, public declarations of the central bank's stance and effective use of macro-prudential management tools, a series of robust measures have been adopted to prevent the risks of exchange rate overshooting.
Overall, the monetary policy in 2024 achieved favorable results. The total amount of finance grew reasonably. At the end of December, the social financing scale increased by 8.0% year on year, the broad money supply (M2) grew by 7.3% year on year, and RMB loans increased by 7.6% year on year, all higher than the nominal economic growth rate. Loan interest rates have been steadily declining. In December, the interest rate for newly issued corporate loans was approximately 3.43%, down 0.36 percentage point year on year, and the interest rate for personal housing loans was approximately 3.11%, down 0.88 percentage point year on year. The credit structure continued to improve, with medium- and long-term loans to the manufacturing industry increasing by 11.9% year on year, loans to specialized and sophisticated enterprises that produce new and unique products growing by 13.0% year on year, and inclusive loans to micro and small businesses rising by 14.6% year on year, continuing to outpace the overall loan growth rate for the same period. The RMB exchange rate remained basically stable at a reasonable and balanced level, with the exchange rate stabilizing at around 100 against a basket of currencies, taking into account both internal and external balance.
Following the central government's directive to implement more proactive and effective macroeconomic policies, the PBC will implement moderately loose monetary policies this year. In recent years, prudent monetary policy has increasingly emphasized requirements of being more forceful, effective, precise and flexible, with a tendency toward a more relaxed control range. It will also continuously strengthen counter-cyclical adjustments based on mid-year economic performance, and has consistently reduced reserve requirements and interest rates since the end of 2019, resulting in a relatively loose social financing environment.
In the next stage, macroeconomic policies will further strengthen counter-cyclical adjustments. We will appropriately adjust and optimize the intensity and timing based on domestic and international economic and financial conditions and financial market performance, to support the achievement of annual economic and social development goals. We will comprehensively use various monetary policy tools, such as interest rates and the reserve requirement ratio (RRR), to maintain ample liquidity and ensure a relaxed social financing environment. We will strengthen the implementation of interest rate policies, and further reduce overall social financing costs while maintaining healthy financial operations. We will effectively utilize structural monetary policy tools and leverage the dual functions of monetary policy tools in terms of both volume and structure. We will continue to take comprehensive measures to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
That's all for my introduction. Next, my colleagues and I will be happy to answer your questions. Thank you.
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