How Finance Can Provide Strong Support for Stable Economic Growth—A Focus on the People’s Bank of China’s 2026 Task List

  The year 2026 marks the beginning of the 15th Five-Year Plan period. How can the financial sector provide robust support for stable economic growth and high-quality development? The People’s Bank of China’s 2026 Work Conference, held from January 5 to 6, sent out a series of policy signals.

  The People’s Bank of China stated that, in 2026, it will continue to implement a moderately accommodative monetary policy, strengthen counter-cyclical and cross‑cycle adjustments, enhance the quality and effectiveness of financial services in supporting the high‑quality development of the real economy, focus on expanding domestic demand and optimizing supply, prevent and defuse risks, and stabilize market expectations, thereby fostering a favorable monetary and financial environment for stable economic growth, high‑quality development, and the steady functioning of financial markets.

  As a primary policy tool for macroeconomic regulation, monetary policy exerts a profound influence on economic performance. At its work conference, the People’s Bank of China outlined a series of measures: “Prioritize promoting high-quality economic development and a moderate rebound in prices as key considerations in monetary policy”; “Employ a range of monetary policy instruments—including reserve requirement ratio cuts and interest rate reductions—in a flexible and efficient manner”; “Maintain ample liquidity”; and “Keep social financing conditions relatively accommodative.”…

  “These system deployments provide concrete guidance for continuing to implement a moderately accommodative monetary policy,” said Xie Guangqi, Director-General of the Monetary Policy Department of the People’s Bank of China. He added that, particularly from a structural perspective, it is essential to leverage the incentive‑driving role of structural monetary policy tools, refine tool management, and further advance the five major priorities in finance while stepping up support for key areas such as expanding domestic demand.

  In response, the meeting outlined the following measures: further refine the policy framework for the “five major financial initiatives,” effectively implement the assessment and evaluation system, strengthen the evaluation of financial service outcomes, and enhance the professionalism and precision of financial services. The structural monetary policy toolkit will be improved, with optimized design and management, to bolster financial support for key areas such as expanding domestic demand, technological innovation, and small, medium, and micro enterprises. Additionally, the bond market’s “Science and Technology Board” will be developed and upgraded to a high standard.

  At the conference, reporters learned that, through the bond market’s “Science and Technology Board,” more than 700 issuers raised over RMB 1.5 trillion in science and technology innovation bonds last year.

  Cao Yuanyuan, head of the Financial Markets Department of the People’s Bank of China, stated that since the launch of the “Science and Technology Bond Market,” the interbank bond market has seen 264 companies issue approximately RMB 660 billion in science-and‑technology innovation bonds, covering 28 provinces nationwide. Bond maturities have been further extended, with over 60% of issuers opting for terms exceeding three years, and private enterprises have demonstrated strong participation, accounting for more than 20% of issuances.

  To enhance the efficiency of capital utilization, it is essential to further ensure the smooth transmission of monetary policy. The People’s Bank of China has stated that this year it will effectively leverage the guiding role of policy interest rates and strengthen the implementation and oversight of interest-rate policies.

  Xie Guangqi stated that the People’s Bank of China will refine the market-based mechanisms for interest-rate formation, regulation, and transmission; streamline the transmission channels from policy rates to various market rates; and help keep overall social financing costs at low levels. It will also strengthen policy communication and expectation management, enhance coordination among monetary policy and fiscal, industrial, and other policies in demand management and structural adjustment, and further ensure smooth transmission of policy signals.

  Supporting eligible foreign-funded financial institutions to participate in pilot programs for new business in China, enhancing connectivity between domestic and overseas markets, and refining policy frameworks for the cross-border use of the renminbi… Information from the conference indicates that China’s high‑level financial opening-up is steadily expanding.

  In response to the ongoing deepening of financial reform and opening-up, the People’s Bank of China has rolled out a series of measures: continuing to refine the mechanisms of Bond Connect and Swap Connect; encouraging financial institutions to enhance cross-border financial services; upgrading the infrastructure for RMB cross-border usage; and expanding the scope of interconnection among fast payment systems…

  Risk prevention and control is a perennial priority in financial work. At its recent work conference, the People’s Bank of China proposed “prudently defusing financial risks in key areas” and laid out specific measures for multiple sectors:

  Continue to effectively support efforts to mitigate debt risks at financing platforms, and steadily and orderly facilitate their exit. Advance risk resolution in key regions and at key institutions, and strengthen risk identification and early corrective measures for small and medium-sized financial institutions. Establish institutional arrangements to provide liquidity to non-bank financial institutions under specific scenarios, and fully leverage the role of the two monetary policy tools that support the capital markets.

  An official from the People’s Bank of China stated that it is essential to adhere to the overarching principle of seeking progress while maintaining stability, leverage the synergistic effects of both new and existing policies, promote high-quality financial development, and contribute to a strong start and steady momentum during the 15th Five-Year Plan period.

[Editor-in-charge: Zhao Wenhan]

Source: Xinhua Net