Chinese Central Bank Outlines Near-term Focal Points in Q2 Monetary Policy Execution Report

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The People’s Bank of China (PBOC) has provided a broad outline of its key focal points for the near-term future in its latest monetary policy execution report.

PBOC released the “China Monetary Policy Execution Report” for the second quarter of 2021 on 9 August.

The Report said that in future PBOC would “maintain the stability of monetary policy, strengthen its foresight and effectiveness, refrain from engaging in flood-style irrigation, and continue to focus on supporting the real economy and providing assistance to small and medium-sized enterprises and challenged industries in ongoing recovery.”

“Stable monetary policy must be flexible, targeted and rationally moderate,” said the Report. “Stability is the watch word, and [we] must continue to implement normal monetary policy, effectively perform cross-cyclical policy design, strengthen macro-policy independence, and effectively grasp the vigour and rhythm of policy on the basis of domestic economic conditions and price trends.”

PBOC highlighted seven areas of policy focus in future including:

  1. Maintaining rational growth in lending and total social financing.
  2. Continuing to effectively implement and employ the guidance and driving role of structured monetary policy tools.
  3. Establishing systems and mechanisms for finance to more effectively support the real economy.
  4. Deepening interest rate and exchange rate marketisation reforms, and clearing out channels for the transmission of monetary policy.
  5. Strengthening the development of financial market infrastructure; servicing the real economy and preventing market risk.
  6. Further driving reform of financial institutions, continually improving corporate governance, and optimising financial supply.
  7. Improving financial risk prevention, early warning, disposal and accountability systems. Establishing long-term effective mechanisms for the prevention and resolution of financial risk.



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