Executive Summary
Since the beginning of 2025, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping as its core, China’s economy has developed steadily on a positive trajectory amid pressures, achieving positive results in high-quality development. Major economic indicators remained generally stable, demonstrating strong resilience and vitality. The GDP grew 5.2 percent year on year in the first three quarters of the year. Following the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the People’s Bank of China (PBOC) has earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council. It has pursued an appropriately accommodative monetary policy, maintained adequate liquidity, and employed a mix of quantitative, pricing, and structural monetary policy tools, thereby creating a favorable monetary and financial environment for economic recovery and the stable operation of financial markets.
First, money and credit maintained reasonable growth. The PBOC kept liquidity adequate by using a mix of tools, including open market operations (OMOs), medium-term lending facility (MLF) operations, and central bank lending and discounts. Financial institutions were encouraged to fully satisfy the effective credit needs of the real economy and to enhance the efficiency of fund utilization so as to improve the quality and efficiency of financial services for the real economy. Second, overall social financing costs were guided to move downward. The PBOC improved the market-oriented interest rate adjustment framework, strengthened implementation of the interest rate policy, and gave full play to the role of the self-regulatory mechanism for market-based interest rate pricing to bring down both deposit and lending rates. Third, the credit structure was improved. The PBOC made good use of RMB500 billion of the central bank lending facility for service consumption and elderly care and the newly-added central bank lending in support of sci-tech innovation and technological upgrading and it leveraged the risk-sharing instrument for sci-tech innovation bonds, all in an effort to strengthen support for key domestic demand sectors, such as consumption and sci-tech innovation. While ensuring effective use of existing structural monetary policy instruments, the PBOC continued its efforts to develop technology finance, green finance, inclusive finance, old-age finance, and digital finance. Fourth, the RMB exchange rate remained basically stable. Upholding the decisive role of the market in the formation of the exchange rate, the PBOC gave play to the role of the exchange rate in adjusting the macro economy and the balance of payments. It implemented a mix of policies to keep expectations stable, and the RMB exchange rate remained basically stable despite the complex circumstances. Fifth, risk prevention and resolution were strengthened. Risk resolution in key areas was steadily promoted, and the system of financial risk monitoring, assessments, and early warnings was continuously improved.
The counter-cyclical adjustments of monetary policy took effect. Financial aggregates witnessed reasonable growth. At end-September, outstanding aggregate financing to the real economy (AFRE) and broad money supply (M2) recorded year-on-year growth of 8.7 percent and 8.4 percent, respectively. Outstanding RMB-denominated loans registered RMB270.4 trillion. Social financing costs were at a historic low. In September, interest rates on new corporate loans and on new personal housing loans dropped by about 40 basis points and 25 basis points year on year, respectively. The credit structure continued to improve. The RMB exchange rate remained basically stable at an adaptive and equilibrium level. At end-September, the central parity of the RMB against the U.S. dollar appreciated by 1.2 percent from end-2024.
Currently, the external environment is fraught with instabilities and uncertainties. The international economic and trade order is facing grave challenges, the momentum for world economic growth remains insufficient, and the performance of the economy in the major economies is diverging. China’s economy still faces multiple risks and challenges, and the foundation for economic rebound and improvement needs to be further consolidated. At the same time, China’s economy has a solid foundation, advantages in many areas, strong resilience, and great potential. The conditions for and underlying trend of long-term growth remain unchanged. It is essential to maintain strategic resolve, enhance our confidence of success, and drive major breakthroughs in strategic tasks of overall importance to Chinese modernization. Going forward, under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the PBOC will fully implement the guiding principles of the 20th National Congress of the CPC and the plenary sessions of its Central Committee held thereafter as well as the Central Economic Work Conference. It will adhere to the general principle of seeking progress while maintaining stability, and it will apply the new development philosophy fully and faithfully on all fronts. Firmly following the path of financial development with Chinese characteristics, the PBOC will further deepen financial reforms and the high-standard opening-up, and it will accelerate the pace of building China into a financial powerhouse. It will improve the central banking system, establish a well-conceived, prudent monetary policy framework as well as a far-ranging macro-prudential management system, and it will smooth the monetary policy transmission mechanism. The PBOC will work to strike a balance between short-term and long-term considerations, between growth stability and risk prevention, between internal and external equilibria, and between supporting the real economy and maintaining the soundness of the banking system. It will enhance the consistency of the macro policy orientation, effectively implement counter-cyclical and intertemporal adjustments, and improve the effectiveness of macroeconomic governance. Continued efforts will be made to maintain stable growth, employment, and expectations.
The PBOC will implement an appropriately accommodative monetary policy. It will employ a mix of policy tools to maintain relatively accommodative social financing conditions, while continuing to improve the monetary policy framework and strengthening the implementation and transmission of monetary policy. It will work to maintain adequate liquidity and keep the growth of aggregate financing and money supply in step with the expected targets for economic growth and general price levels. This will help sustain a favorable financial environment. Promoting a reasonable price recovery will be an important consideration in the implementation of monetary policies so as to keep prices at a reasonable level. The PBOC will further improve the interest rate adjustment framework, strengthen the guiding role of central bank policy rates, and improve the market-based interest rate formation and transmission mechanism. It will leverage the self-regulatory mechanism for market-based interest rate pricing, strengthen implementation and oversight of interest rate policies, and work to reduce the bank liability costs. With these efforts, it will promote a decline in overall financing costs. Giving play to the role of monetary policy tools in adjusting both the aggregate and the structure, the PBOC will make good use of structural monetary policy instruments, make solid efforts to develop technology finance, green finance, inclusive finance, old-age finance, and digital finance, and strengthen support for key areas, such as sci-tech innovation, consumption expansion, inclusive financing for micro and small businesses (MSBs), and foreign trade stabilization. Pursuing a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies, the PBOC will maintain exchange rate flexibility, strengthen expectation guidance, prevent the risk of exchange rate overshooting, and keep the RMB exchange rate basically stable at an adaptive and equilibrium level. While exploring to expand its functions in macro-prudential management and financial stability, the PBOC will safeguard financial market stability and firmly defend the bottom line whereby no systemic financial risks will occur.
