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Speakers:

Mr. Pan Gongsheng, governor of the People's Bank of China (PBC)

Mr. Li Yunze, minister of the National Financial Regulatory Administration (NFRA)

Mr. Wu Qing, chairman of the China Securities Regulatory Commission (CSRC)

Chairperson:

Ms. Shou Xiaoli, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

Sept. 24, 2024

Shou Xiaoli:

Ladies and gentlemen, good morning. Welcome to this press conference held by the State Council Information Office (SCIO). Today, we are glad to have invited Mr. Pan Gongsheng, governor of the People's Bank of China (PBC); Mr. Li Yunze, minister of the National Financial Regulatory Administration (NFRA); and Mr. Wu Qing, chairman of the China Securities Regulatory Commission (CSRC). They will brief you on financial support for high-quality economic development and answer your questions. Now, I'll give the floor to Mr. Pan for his introduction. 

Pan Gongsheng:

Thank you, Ms. Shou. Good morning everyone. It's a pleasure to meet with you all again. I would like to sincerely thank you all for your continued interest in and support for the reforms and developments in the financial sector, as well as the work of the PBC.

This year, the PBC has remained committed to the fundamental goal of serving the real economy through financial services, while maintaining a supportive monetary policy stance. We made several major adjustments to monetary policy in February, May and July.

In terms of overall monetary policy, we have utilized a range of tools, including lowering the reserve requirement ratio (RRR), reducing policy interest rates, and guiding the decline of the loan prime rate (LPR), to foster a favorable monetary and financial environment.

In terms of monetary policy structure, we have focused on key areas of high-quality development, introducing re-lending programs for technological innovation and technical upgrading, while increasing financial support for technological innovation and equipment renewal. We have also reduced the down payment ratio and mortgage rates for home loans, lowered the housing provident fund loan rates, and established a re-lending program for affordable housing, using market-oriented methods to accelerate the reduction of inventory in the commercial housing market.

Regarding monetary policy transmission, we have reformed the way we calculate the quarterly value-added of the financial sector. The previous calculation method, which primarily relied on the growth rates of loans and deposits, has been replaced by an income-based approach. This reform aims to rectify and standardize practices such as manual interest adjustments and idle funds, thereby unlocking the potential of existing but inefficient financial resources, enhancing the effectiveness of fund utilization, and improving the efficiency of monetary policy transmission.

On the exchange rate front, we have upheld the market's decisive role in exchange rate formation, maintained flexibility, guided expectations, and kept the RMB exchange rate stable at a reasonable and balanced level.

The effects of our monetary policy have become increasingly evident. By the end of August, total social financing had grown by 8.1% year on year, and RMB loans had increased by 8.5%, outpacing nominal GDP growth by around 4 percentage points. Meanwhile, financing costs remain at a historic low.

In line with the central government's directives, the PBC will continue to uphold a supportive monetary policy stance, strengthen monetary policy regulation, and enhance precision in its execution to foster a monetary and financial environment conducive to stable economic growth and high-quality development.

I would like to take the opportunity of today's press conference to announce several new policies:

First, we will lower the RRR and policy interest rates, which will drive down market benchmark rates. Second, we will lower mortgage rates on existing home loans and standardize the minimum down payment ratio for mortgages. Third, we will introduce new monetary policy tools to support the stable development of the stock market.

First, lowering the RRR and policy interest rates. We will cut the RRR by 0.5 percentage point in the near term, providing approximately 1 trillion yuan in long-term liquidity to the financial market. Depending on liquidity conditions, we may further reduce the RRR by 0.25 to 0.5 percentage point this year. Additionally, we will lower the central bank's policy interest rate, reducing the seven-day reverse repo rate by 0.2 percentage point — from 1.7% to 1.5%. In addition, we will guide LPR and deposit rates downward in tandem, ensuring the stability of commercial banks' net interest margins.

Second, lowering mortgage rates on existing home loans and standardizing the minimum down payment ratio for mortgages. We will guide commercial banks to reduce interest rates on existing mortgages to a level similar to those of newly issued housing loans, with an expected average reduction of around 0.5 percentage point. The minimum down payment ratio for both first and second homes will be unified, with the nationwide minimum down payment ratio for second homes to be reduced from 25% to 15%. We will increase support for the 300-billion-yuan special refinancing program for affordable housing, launched in May, raising the central bank's funding support ratio from 60% to 100%, strengthening incentives for commercial banks and homebuyers. Additionally, in coordination with the NFRA, we will extend the expiration of two key policy documents — on operational property loans and the 16-point policy plan proposed in 2022 — from the end of this year to the end of 2026.

Third, introducing new monetary policy tools to support the stable development of the stock market. The first is creating a swap facility for securities, funds and insurance companies, enabling eligible ones to obtain liquidity from the central bank through asset pledges. This will significantly enhance their capacity to access funds and increase their stock holdings. The second is creating special re-lending for stock repurchases and shareholding increases, guiding banks to provide loans to listed companies and major shareholders to support these activities.

We will release the relevant policy documents or announcements on the PBC's website in the near future.

That concludes my introduction. Later, I will join Mr. Li and Mr. Wu to answer your questions. Thank you.

Shou Xiaoli:

Thank you, Mr. Pan. Now, I'll give the floor to Mr. Li for his introduction.