China announced on Wednesday a sweeping financial package aimed at stabilizing markets and boosting economic momentum. The measures, introduced at a press conference by top officials from the People's Bank of China (PBOC), the National Financial Regulatory Administration (NFRA), and the China Securities Regulatory Commission (CSRC), include interest rate cuts, liquidity injections, and targeted support for key sectors.
PBOC Governor Pan Gongsheng revealed that the central bank will reduce the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points starting May 15. This move is expected to release approximately 1 trillion yuan (about $138.9 billion) in long-term liquidity into the economy.
"These measures are designed to enhance market confidence and provide solid support for key industries," Pan said. "We are committed to fostering a stable financial environment that promotes sustainable growth."
In addition to the RRR cut, key policy rates will be lowered. The 7-day reverse repo rate will decrease by 10 basis points from 1.5 percent to 1.4 percent, and interest rates for structural monetary policy tools will be cut by 25 basis points. Interest rates for individual housing provident fund loans will also see a 25 basis point reduction.
Structural tools will be scaled up, with an expanded refinancing facility to support technological innovation, consumer services, and rural development. This targeted support aims to bolster sectors that are crucial for the country's long-term economic health.
Bruce Pang, a distinguished senior research fellow at the National Institution for Finance and Development, noted that these reductions provide crucial support for China's economy. "As policymakers navigate economic uncertainties, continued easing is likely to remain a central theme in the financial landscape," he commented.
NFRA head Li Yunze announced that the administration would accelerate the introduction of financing mechanisms aligned with a new model of real estate development to help stabilize the property market. "We aim to consolidate the stability of the real estate market by introducing innovative financing solutions," Li stated.
Li also pledged to expand the scope of long-term insurance fund investments, aiming to inject more incremental capital into the market. Additionally, a policy package will be rolled out to strengthen financing support for small and private enterprises, which are vital contributors to employment and economic growth.
CSRC Chairman Wu Qing emphasized the commission's commitment to deepening cross-border regulatory cooperation. "We are fostering a stable, transparent, and predictable environment for Chinese companies operating overseas," Wu said.
For listed companies significantly affected by unilateral tariffs imposed by the United States, the CSRC will adopt a more flexible regulatory approach. Adjustments will be made in areas such as equity pledges, refinancing, and the use of raised funds to help these companies navigate operational challenges.
The comprehensive financial package reflects China's proactive approach to sustaining economic growth and market stability amid global uncertainties. By implementing these measures, the country aims to reinforce confidence among investors and businesses alike.
