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China's monetary policy supports high-quality growth

Xinhua | March 6, 2023


China's prudent monetary policy has provided a favorable financial environment for high-quality development, Yi Gang, governor of the People's Bank of China (PBOC), said Friday.

Noting that maintaining reasonable credit growth has played a vital role in stabilizing employment and ensuring people's livelihood, Yi told a press conference that the PBOC cut the reserve requirement ratio 14 times since 2018, releasing over 11 trillion yuan (1.59 trillion U.S. dollars) of long-term liquidity.

In recent years, China has implemented a prudent and normal monetary policy, which provided a solid foundation for ensuring overall price stability, Yi said.

Last year, the country kept its consumer price index growth at 2 percent, a sharp contrast to the high level of international inflation, Yi said, adding that the flexible market-based exchange rate system stabilizes the macro-economy and international balance of payments.

China lowered the loan prime rates last year to keep the real interest rates at an appropriate level, effectively guiding the financial costs down and supporting the real economy.

Yi pointed out that the interest rates for new corporate loans averaged 4.17 percent in 2022, down 1.28 percentage points over 2018. The interest rate of inclusive loans to small and micro enterprises stood at 4.9 percent in December 2022, down from 6.3 percent in January 2018.

He said the PBOC has also increased its support to key areas and weak links. The country has supported small and micro businesses to mitigate the epidemic's impact by deferring their repayments of loan principal and interest.

By the end of 2022, the country's outstanding amount of structural monetary policy tools stood at 6.4 trillion yuan, accounting for 15 percent of the central bank's total assets. The outstanding inclusive loans to small and micro firms nearly reached 24 trillion yuan, official data showed.

China will strive to maintain the appropriate supply of money and credit, while implementing structural monetary policies to support small and micro firms, green finance, and scientific and technological innovation, among other sectors, Yi said.