The central bank's latest statement! Answering questions on monetary policy, RMB exchange rate, and boosting consumption

According to the Zhitong Finance APP, on July 14, the State Council Information Office held a press conference where Zou Lan, Deputy Governor of the People's Bank of China, introduced the implementation of monetary credit policies and financial statistical data for the first half of 2025, and answered questions from reporters. Zou Lan stated that from the financial data of the first half of the year, the effect of monetary policy supporting the real economy is quite evident. By the end of June, the total social financing stock increased by 8.9% year-on-year, M2 increased by 8.3% year-on-year, and RMB loans increased by 7.1% year-on-year. If local special bonds are replaced with loans from local financing platforms for adjustment, the year-on-year growth rate of loans on a comparable basis would be even higher.

Zou Lan indicated that since the beginning of this year, the People's Bank of China has focused on key tasks in economic work, strengthened the targeting and effectiveness of monetary credit policies, and implemented comprehensive measures to effectively respond to external shocks and promote economic recovery.

In May of this year, the People's Bank of China launched another package of financial policy measures, which included several structural monetary policy tools. These structural policy measures were all implemented and initiated by the end of May. By the end of May, the signed contract amount for loans for technological innovation and technological transformation reached 17.4 trillion yuan, which enterprises can withdraw and use at any time; the risk-sharing tool for technological innovation bonds provides enhanced support for equity investment institutions to issue bonds for financing.

He pointed out that a moderately loose monetary policy means that liquidity should remain ample, social financing conditions should be relatively relaxed, and comprehensive financing costs should be relatively low. Policy implementation should be based on changes in the situation, with timely and appropriate choices in rhythm and intensity. From an international comparison, there have been multiple rounds of reserve requirement ratio and interest rate cuts in recent years, and the state of monetary policy is supportive, with policy effects continuously accumulating. Since 2020, the People's Bank of China has cumulatively cut the reserve requirement ratio 12 times and lowered policy interest rates 9 times, leading to a decrease in the one-year and five-year loan market quoted rates (LPR) by 115 and 130 basis points, respectively.

Yan Xiandong, Director of the Survey and Statistics Department of the People's Bank of China, stated that from the perspective of industry investment, the structure of loans continued to optimize in the first half of the year, with new loans mainly directed towards key areas such as manufacturing and infrastructure. Specifically, by the end of June, the balance of medium- and long-term loans in the manufacturing sector increased by 8.7% year-on-year, with an increase of 920.7 billion yuan in the first half of the year; the balance of medium- and long-term loans in the infrastructure sector increased by 7.4% year-on-year, with an increase of 2.18 trillion yuan in the first half of the year.

The market generally expects the Federal Reserve to restart interest rate cuts in the second half of the year, as major developed economies are in a rate-cutting cycle. The market's expectations for the Federal Reserve to restart interest rate cuts are heating up, which will improve the misalignment of monetary policy cycles between China and the United States, leading to a narrowing of the interest rate spread between the two countries.

Zou Lan stated that China does not seek to gain international competitive advantages through currency depreciation. The People's Bank of China's stance on exchange rate policy is clear and consistent, and it will continue to uphold the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, strengthen expectation guidance, prevent excessive exchange rate fluctuations, and keep the RMB exchange rate basically stable at a reasonable and balanced level.

Zou Lan indicated that in the next stage, the People's Bank of China will further implement a moderately loose monetary policy, ensure the execution of various monetary policy measures that have been introduced, and enhance the quality and effectiveness of financial services to the real economy. In terms of total volume, it will grasp the intensity and rhythm of policy implementation, maintain ample liquidity, and ensure that the growth of social financing scale and money supply matches the economic growth and overall price level expectations, continuously creating a suitable financial total volume environment. In terms of structure, it will highlight key directions for financial services to the real economy, focusing on technological innovation, expanding consumption, and supporting small and micro private enterprises, strengthening policy coordination and linkage, and making full use of various structural monetary policy tools Strengthening support for key areas and weak links. In terms of transmission, strengthen the execution and supervision of interest rate policies, better play the role of industry self-discipline, maintain the competitive order of the banking industry, improve the efficiency of fund utilization, prevent fund idling, and strike a balance between financial support for the real economy and maintaining its own health. In terms of improving the monetary policy framework, further improve the market-oriented interest rate adjustment mechanism, optimize the intermediate variables of monetary policy, continuously improve the monetary policy tool system, and establish a credible, normalized, and institutionalized policy communication mechanism to better serve high-quality development.

The transcript is as follows:

Xing Huina, Deputy Director of the News Bureau and Spokesperson of the State Council Information Office:

Ladies and gentlemen, good afternoon! Welcome to the press conference of the State Council Information Office. Today, we will conduct a routine release of economic data. We have invited Mr. Zou Lan, Deputy Governor of the People's Bank of China, to introduce the implementation of monetary credit policy and financial statistical data for the first half of 2025, and to answer your questions of concern. Also present at today's press conference are: Mr. Peng Lifeng, Director of the Credit Market Department of the People's Bank of China, Mr. Yan Xiandong, Director of the Survey and Statistics Department, and Ms. Cao Yuanyuan, head of the Financial Market Department.

Now, let's first invite Mr. Zou Lan to give an introduction.

Zou Lan, Deputy Governor of the People's Bank of China:

Good afternoon, media friends. Thank you for your long-term concern and support for the work of the People's Bank! I am pleased to have this opportunity to report on the implementation of monetary credit policy and financial statistical data for the first half of 2025, and my three colleagues and I will answer your questions.

Since the beginning of this year, the external environment has become increasingly complex and severe, global growth momentum has weakened, and trade protectionism has risen. According to the spirit of the Central Economic Work Conference and the deployment of the "Government Work Report," it is necessary to implement a moderately loose monetary policy. Governor Pan Gongsheng discussed his understanding of a moderately loose monetary policy at a press conference in May, simply put, liquidity should remain ample, social financing conditions should be relatively loose, and comprehensive financing costs should be relatively low. Policy implementation should be based on changes in the situation, with timing and intensity being appropriate. From an international comparison, in recent years, there have been multiple rounds of reserve requirement ratio and interest rate cuts, and the state of monetary policy is supportive, with policy effects continuously accumulating. Since 2020, the People's Bank has cumulatively cut the reserve requirement ratio 12 times; cumulatively lowered policy interest rates 9 times, leading to a decrease of 115 and 130 basis points in the one-year and five-year loan market quoted interest rates, respectively.

To implement a moderately loose monetary policy, the People's Bank has further increased counter-cyclical adjustment efforts, launching a package of financial support measures in May. By comprehensively using various monetary policy tools, maintaining ample liquidity, and promoting reasonable growth in monetary credit. Improving the market-oriented interest rate adjustment framework, strengthening the execution and supervision of interest rate policies, and promoting a decrease in the comprehensive financing costs of society. Better leveraging the dual functions of monetary policy tools in terms of both total amount and structure, guiding further optimization of credit structure, strengthening the coordination between monetary policy and other macro policies, and forming a joint force to continuously create a suitable environment for promoting economic recovery.

From the financial data in the first half of the year, the effect of monetary policy supporting the real economy is quite evident. First, the total amount of finance has grown reasonably. By the end of June, the stock of social financing increased by 8.9% year-on-year, the broad money supply M2 increased by 8.3% year-on-year, and RMB loans increased by 7.1% year-on-year If we restore the impact of replacing local special bonds with local financing platform loans, the year-on-year growth rate of loans would be even higher on a comparable basis. Second, the comprehensive financing cost for society is declining at a low level. From January to June, the weighted average interest rate of newly issued corporate loans was approximately 3.3%, about 45 basis points lower than the same period last year, while the interest rate for newly issued personal housing loans was about 3.1%, approximately 60 basis points lower than the same period last year. Third, the credit structure continues to optimize. By the end of May, inclusive small and micro loans increased by 11.6% year-on-year, medium and long-term loans in the manufacturing sector grew by 8.8% year-on-year, and technology loans increased by 12%, all of which were higher than the overall loan growth rate. Fourth, the resilience of the financial market has strengthened. Against the backdrop of significant changes in the external environment and global financial markets, major financial markets such as stocks, bonds, and foreign exchange have maintained stable operations.

From the perspective of economic theory and practical experience, the transmission of monetary policy takes time, and the effects of already implemented monetary policies will continue to emerge. In the next stage, the People's Bank of China will continue to implement a moderately loose monetary policy, closely monitor and assess the transmission and actual effects of previously implemented policies, and adjust the intensity and pace of policy implementation based on domestic and international economic and financial conditions and the operation of financial markets, better promoting the expansion of domestic demand, stabilizing social expectations, stimulating market vitality, and supporting the achievement of annual economic and social development goals and tasks.

I will introduce these points first and leave more time for everyone to ask questions.

Xing Huina:

Now I welcome everyone to raise their hands to ask questions. Please announce your news organization before asking.

CCTV Reporter:

In the first half of the year, the People's Bank of China introduced a series of monetary and credit policy measures. What is the current implementation status of these policies? We are also very concerned about what measures the People's Bank of China will take in the second half of the year to promote the sustained recovery of the economy. Thank you.

Zou Lan:

Thank you for your question. I believe many other media friends are also very concerned about this. Since the beginning of this year, the People's Bank of China has focused on key tasks in economic work, strengthened the targeting and effectiveness of monetary and credit policies, and implemented comprehensive measures to effectively respond to external shocks and promote economic recovery.

In terms of monetary policy, we adhere to a moderately loose policy orientation. On May 7, Governor Pan Gongsheng announced a package of 10 monetary policy measures. In terms of quantity, we comprehensively used monetary policy tools such as reserve requirement ratio cuts to maintain ample liquidity and increase medium and long-term liquidity support. In terms of price, we focused on leveraging the regulatory role of interest rate tools, lowering policy interest rates, reducing the interest rates of structural monetary policy tools and personal housing provident fund loans, rectifying and standardizing violations of interest rate regulations, and strengthening self-discipline management of interest rates. In terms of structure, we established re-loans for service consumption and elderly care, increased the re-loan quota for technological innovation and technological transformation, and created risk-sharing tools for technology innovation bonds, providing strong support for boosting consumption and technological innovation in key areas of domestic demand. The entire package of policies has been implemented within one month, playing a positive role in boosting market confidence and stabilizing expectations, continuously creating a good monetary and financial environment for promoting economic recovery. The financial data I just introduced for the first half of the year is also an important reflection of the policy effects.

In terms of credit policy, we strengthen policy guidance and assessment. We continue to improve the policy framework and promote the issuance of the "Guiding Opinions on Doing a Good Job in the Financial 'Five Major Articles'," guiding the financial system to increase credit investment in technology, green, inclusive, elderly care, digital, and other fields Improve the assessment mechanism for the "Five Major Articles" to form a closed loop of policy guidance, financial support, and effect evaluation. Effectively utilize financial support to resolve structural contradictions in key industries and promote quality upgrades, reasonably ensure the financing needs of foreign trade enterprises according to market-oriented and rule-of-law principles, optimize cross-border payment and settlement services, and help stabilize employment and the economy. By the end of May, green, technology, and inclusive loans increased by 27.4%, 12%, and 11.2% year-on-year, respectively, maintaining a rapid growth rate.

In the next phase, the People's Bank of China will further implement a moderately loose monetary policy, ensure the execution of various monetary policy measures that have been introduced, and enhance the quality and efficiency of financial services for the real economy.

In terms of total volume, grasp the intensity and rhythm of policy implementation, maintain ample liquidity, and ensure that the growth of social financing scale and money supply aligns with economic growth and the expected target for overall price levels, continuously creating a suitable financial environment.

In terms of structure, highlight the key directions of financial services for the real economy, focus on technological innovation, expanding consumption, and supporting private small and micro enterprises, strengthen policy coordination and linkage, make full use of various structural monetary policy tools, and increase support for key areas and weak links.

In terms of transmission, strengthen the execution and supervision of interest rate policies, better play the role of industry self-discipline, maintain market competition order in the banking industry, improve the efficiency of fund utilization, prevent fund idling, and balance financial support for the real economy with maintaining its own health.

In terms of improving the monetary policy framework, further improve the market-oriented interest rate adjustment mechanism, optimize the intermediate variables of monetary policy, continuously improve the monetary policy tool system, and establish a credible, normalized, and institutionalized policy communication mechanism to better serve high-quality development.

That's all I have to say, thank you.

Elephant News Reporter:

How is the total amount and structure of credit in the first half of this year? Thank you.

Zou Lan:

This question will be answered by Director Yan Xiandong of the Survey and Statistics Department.

Director of the Survey and Statistics Department of the People's Bank of China Yan Xiandong:

Thank you for the reporter's question. Since the beginning of this year, the People's Bank of China has earnestly implemented the spirit of the Central Economic Work Conference and the deployment of the "Government Work Report," carried out a moderately loose monetary policy, strengthened counter-cyclical adjustments, and used a combination of various monetary policy tools to serve the high-quality development of the real economy. In terms of results, credit in the first half of the year showed characteristics of "total growth and structural optimization."

The total amount of credit maintained stable growth. By the end of June, the balance of various RMB loans from financial institutions was 268.56 trillion yuan, an increase of 7.1% year-on-year. In the first half of the year, new RMB loans amounted to 12.92 trillion yuan, indicating that the financial system's credit support for the real economy remained at a high level. The main characteristics are as follows:

In terms of borrowing entities, loans to enterprises (and institutions) are the main contributors to credit growth. In the first half of the year, loans to enterprises (and institutions) increased by 11.57 trillion yuan, accounting for 89.5% of all new loans, an increase of 6.6 percentage points compared to the same period last year. Among them, medium- and long-term loans increased by 7.17 trillion yuan, which is the main component of the increase in loans to enterprises, indicating that finance continues to provide a stable source of funds for the real economy. Household loans increased by 1.17 trillion yuan, of which operating loans increased by 923.9 billion yuan, reflecting the continued strengthening of financial institutions' support for the production and operation activities of individual businesses and small and micro enterprise owners From the perspective of industry investment, the loan sector structure continues to optimize. New loans are primarily directed towards key areas such as manufacturing and infrastructure. Specifically, by the end of June, the balance of medium and long-term loans in the manufacturing sector increased by 8.7% year-on-year, with an increase of 920.7 billion yuan in the first half of the year; the balance of medium and long-term loans in the infrastructure sector increased by 7.4% year-on-year, with an increase of 2.18 trillion yuan in the first half of the year.

In addition, loans in the financial "five major articles" sector show characteristics of "overall growth and expanded coverage." Effectively managing the financial "five major articles" is an important focus for financial services to support the high-quality development of the real economy and is also a key aspect of deepening structural reforms on the supply side of finance. In recent years, the People's Bank of China has continuously worked on the financial "five major articles" to better support major strategies, key areas, and weak links. By the end of May, the loan balance for the financial "five major articles" was 103.3 trillion yuan, a year-on-year increase of 14%. The balance of technology loans, which is of particular interest, was 43.3 trillion yuan, a year-on-year increase of 12%, of which the balance of loans to technology enterprises was 22.5 trillion yuan, and the balance of loans to technology-related industries was 32.8 trillion yuan. It may be noted that the balance of technology loans is lower than the sum of the sub-item loan balances because we excluded duplicates between subcategories when aggregating the data for the financial "five major articles," accurately reflecting the effectiveness of the work on the financial "five major articles." By the end of May, green, inclusive, pension, and digital loans increased by 27.4%, 11.2%, 38%, and 9.5% year-on-year, respectively. All of these loan growth rates are higher than the growth rates of various loans during the same period. The availability of financing has significantly improved. A total of 78.39 million households, including enterprises and individuals, were served, an increase of 5.88 million households compared to the same period last year; among them, 4.4 million enterprises were served, an increase of 250,000 compared to the same period last year.

That's all I have to say, thank you.

Bloomberg Reporter:

We have seen that many small and medium-sized banks are still adopting relatively aggressive investment policies in the bond market this year. How does the central bank view their investment risks?

Zou Lan:

I would like to invite Ms. Cao Yuanyuan from the Financial Markets Department to answer this question.

Cao Yuanyuan, Head of the Financial Markets Department of the People's Bank of China:

First, thank you for your concern about China's bond market. In the first half of this year, our bond market operated relatively smoothly, with overall expectations stable, and the market size steadily increasing, effectively supporting financing for the real economy. In the first half of 2025, the Chinese bond market issued various bonds totaling 44.3 trillion yuan, a year-on-year increase of 16%; net bond financing was 8.8 trillion yuan, accounting for 38.6% of the increase in social financing scale, strongly supporting the implementation of proactive fiscal policies and financing for real enterprises. In the first half of the year, government bonds issued totaled 13.3 trillion yuan, corporate credit bonds issued totaled 7.3 trillion yuan, and financial bonds issued totaled 6 trillion yuan. Bond financing continues to tilt towards key areas, with private enterprise bonds issued exceeding 350 billion yuan in the first half of the year, and green, technology, and related bonds issued exceeding 1 trillion yuan. In June 2025, the average issuance interest rate for corporate credit bonds was 2.08%, a decrease of 32 basis points compared to the same period last year, further reducing the financing costs for the real economy.

Regarding your concern about small and medium-sized banks' bond investments, bond investments are an important component of bank assets. In recent years, loans and bonds have accounted for 60% and 25% of total bank assets, respectively, remaining relatively stable; The proportion of government bonds held by banks accounts for 70% of all government bonds, while the proportion of corporate credit bonds held accounts for about 20% of all corporate credit bonds. It can be said that the participation of banks has formed a strong support for the implementation of fiscal policy and the development of the real economy. As for small and medium-sized banks, considering their own asset allocation, choosing to appropriately increase their bond holdings to enhance the allocation of safe assets and smooth out fluctuations in operating profits is reasonable within the regulatory framework. At the same time, banks' voluntary buying and selling of bonds can also act as a stabilizer for the market. When bond yields are relatively high compared to loan rates and prices are relatively low, banks will buy bonds, which helps stabilize the market. Conversely, when bond yields are low and bond prices are high, banks can sell some bonds to realize their own profits and maintain the sustainability of their support for the real economy.

Of course, we believe that the bond investments of small and medium-sized banks also need to maintain a reasonable "degree." It is important to balance investment returns and risk-bearing. For individual financial institutions that are relatively aggressive in bond investments, attention should be paid to the interest rate and credit risks faced by the bonds. The People's Bank of China will continue to strengthen market monitoring and timely share information about high-risk institutions with regulatory departments, focusing on capital adequacy and market risks. At the same time, the People's Bank of China will continue to strengthen market construction, continuously enrich interest rate and credit risk management tools, effectively play the role of market mechanisms, and effectively prevent financial market risks.

This is my answer, thank you for your question.

Poster News Reporter:

Recently, the People's Bank of China, in conjunction with relevant departments, issued the "Guiding Opinions on Financial Support for Boosting and Expanding Consumption." What specific key measures are included? Thank you.

Zou Lan:

This question will be answered by Director Peng Lifeng of the Credit Market Department.

Peng Lifeng, Director of the Credit Market Department of the People's Bank of China:

Thank you for your question. Boosting consumption is the primary focus of economic work in 2025. In accordance with the decisions and deployments of the Party Central Committee and the State Council, the People's Bank of China, together with relevant departments, previously issued the "Guiding Opinions on Financial Support for Boosting and Expanding Consumption," guiding financial institutions to strengthen financial services from both the supply and demand sides of consumption to meet the diverse financing needs of business entities and consumers. We aim to promote the expansion of high-quality consumption supply and help unleash the potential for consumption growth.

First, support enhancing consumption capacity and cultivating consumption demand. Resident consumption requires income, and income requires jobs, so stable employment and income growth are the foundation for residents to expand consumption. The "Opinions" clarify the financial support focus points around supporting employment, increasing residents' property income, and strengthening insurance protection, proposing measures such as deeply implementing the entrepreneurship guarantee loan policy, innovating financial products for family wealth management, and optimizing the insurance protection system for pensions and health.

Second, build a multi-level financial service system to support consumption, fully meeting the financing needs of consumption market entities. The "Opinions" require leveraging the main channel role of credit, effectively utilizing re-lending policy tools, and increasing support for first loans, renewal loans, credit loans, and medium- to long-term loans for eligible business entities. Increase support for bonds and equity, and expand diversified consumption financing channels Third, focus on providing precise financial support in key consumer areas to enhance the efficiency of financial resource allocation. The "Opinions" require financial institutions to innovate financial products based on consumption scenarios and characteristics, promoting the improvement and efficiency of financial services in the consumption sector, centering around key areas identified in commodity consumption, service consumption, new consumption, and critical links in circulation.

Fourth, strengthen basic financial services to help optimize the consumption environment and enhance consumers' willingness and enthusiasm to consume. The "Opinions" propose to continuously optimize consumption payment services focusing on key consumption scenarios such as food, housing, transportation, travel, shopping, entertainment, and medical care, improve the construction of the credit system in the consumption sector, and strengthen the protection of financial consumer rights.

It is important to emphasize that service consumption is key to boosting consumption and expanding domestic demand, and it also has advantages in creating and absorbing employment. The development of commodity consumption in our country is relatively sufficient, with its proportion of GDP being roughly comparable to international levels, while service consumption is relatively insufficient, indicating significant room for development. Currently, the demand in the service consumption market is relatively strong, and the financial support to meet this demand is quite sufficient, with the main shortcoming affecting the expansion of service consumption being supply. Therefore, the People's Bank of China has specifically established a 500 billion yuan service consumption and pension relending facility to guide financial institutions in precisely supporting high-quality supply in service sectors such as accommodation, catering, cultural tourism, sports and entertainment, education, and pension, addressing the shortcomings and better leveraging consumption's foundational role in economic development, promoting a virtuous cycle of "supply creates demand, demand drives supply."

In the next step, the People's Bank of China will work with relevant departments to continuously strengthen the coordination of financial, fiscal, and industrial policies, guiding localities and financial institutions to accelerate the implementation of the "Opinions," and fully enhance financial services for consumption, providing strong financial support for boosting and expanding consumption.

Thank you.

Reporter from the American International Market News Agency:

Recently, the RMB has continued to appreciate against the US dollar, but its exchange rate against a basket of currencies remains low. How does the People's Bank of China view the current performance of the RMB exchange rate? Is there upward pressure on the RMB against the US dollar? Is it necessary to take measures to stabilize the RMB exchange rate? Thank you.

Zou Lan:

Thank you for your question. I will answer this question. There is significant attention on the changes in the Federal Reserve's monetary policy from various sectors. Recently, the growth rate of the US economy has slowed, but the price level remains above the Federal Reserve's target level, and tariff policies have further increased the uncertainty of inflation trends in the US, affecting the pace and path of the Federal Reserve's interest rate cuts.

The volatility of the US dollar index and US Treasury yields has had a certain spillover effect on global financial markets. The US dollar index has fallen from above 109 at the beginning of the year to around 97 currently, a decline of 11%. The yield on 10-year US Treasury bonds once climbed above 4.8%, reaching a high since December 2023, but has recently retreated to around 4.4%. In comparison, our financial market has shown strong resilience and operates overall smoothly. The RMB exchange rate against the US dollar fluctuated in early April but quickly stabilized. Especially since the joint statement released after the China-US Geneva economic and trade talks in May, the RMB against the US dollar has shown two-way fluctuations, stabilizing below 7.2 yuan.

The factors affecting the exchange rate are diverse, including economic growth, monetary policy, financial markets, geopolitical issues, and risk events. Currently, the trend of the US dollar still has uncertainties, but the domestic fundamentals in China continue to improve, providing a solid foundation for the RMB exchange rate to maintain two-way fluctuations and basic stability First, the domestic economy has further stabilized and improved. In the first quarter, GDP grew by 5.4% year-on-year, marking a good start. On April 25, the Central Political Bureau meeting made important arrangements for economic work, indicating that China's economy will continue to maintain a high-quality development trend. Second, the market generally expects the Federal Reserve to restart interest rate cuts in the second half of the year. Major developed economies are in a rate-cutting cycle, and expectations for the Federal Reserve to resume rate cuts are heating up, which will improve the misalignment of monetary policy cycles between China and the U.S., leading to a narrowing of the interest rate differential. Third, the international balance of payments is basically balanced. The current account surplus to GDP ratio for 2024 is 2.2%, which is within a reasonable equilibrium range. China's financial market is operating stably, with steady progress in opening up, and RMB assets remain attractive, with orderly two-way cross-border capital flows. In the first five months of this year, net cross-border capital inflows from non-bank sectors such as enterprises and individuals amounted to approximately USD 100 billion. Fourth, significant progress has been made in the construction of the foreign exchange market. Market participants are becoming more mature, trading behavior is more rational, and market resilience has significantly increased. In the first half of the year, both the corporate hedging ratio and the proportion of RMB cross-border receipts and payments under goods trade have increased to around 30%, significantly enhancing enterprises' ability to cope with external shocks.

China does not seek to gain international competitive advantages through currency depreciation. The People's Bank of China's stance on exchange rate policy is clear and consistent, and it will continue to uphold the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, strengthen expectation guidance, prevent excessive exchange rate adjustments, and keep the RMB exchange rate basically stable at a reasonable equilibrium level.

Thank you.

Reporter from 21st Century Business Herald:

This year, the People's Bank of China has introduced a series of incremental policies to support technology finance and has innovatively launched the "Technology Board" in the bond market. What is the current progress and effectiveness? What are the next considerations? Thank you.

Zou Lan:

This question will be answered by Ms. Cao Yuanyuan from the Financial Market Department.

Cao Yuanyuan:

Thank you for your question. Doing a good job in technology finance is an important aspect of implementing the innovation-driven development strategy and financial services for the real economy. This year, in accordance with the decisions and deployments of the Party Central Committee and the State Council, the People's Bank of China, together with relevant departments, has introduced two incremental measures: first, optimizing re-lending for technological innovation and technological transformation; second, establishing the "Technology Board" in the bond market, promoting the accelerated construction of the technology finance system from multiple aspects such as credit, bonds, and equity. The implementation of these policies has already achieved relatively good results.

First, regarding re-lending for technological innovation and technological transformation. Currently, this policy has increased, reduced costs, and expanded coverage. By the end of May 2025, the amount of loans for technological innovation and technological transformation signed between banks and enterprises reached 1.7 trillion yuan, which is 1.9 times that of the end of 2024; the balance of loans issued is 614 billion yuan, cumulatively supporting 15,000 technology-based small and medium-sized enterprises to achieve their first loans and providing funding support for 3,983 key equipment upgrade projects.

Second, regarding the establishment of the Technology Board in the bond market. This is an innovative measure to support technology finance, which supports three types of institutions to issue technology innovation bonds through differentiated arrangements in the bond issuance and trading system: first, financial institutions; second, technology-based enterprises; third, equity investment institutions. As of June 30, since its launch in May, the bond market has seen 288 entities issue technology innovation bonds totaling approximately 600 billion yuan, with over 400 billion yuan of technology innovation bonds issued in the interbank market, which not only promotes the cultivation and development of emerging and future industries but also provides strong support for traditional industries to apply new technological achievements Among the three types of issuers of technology innovation bonds, today I would like to focus on the technology innovation bonds issued by equity investment institutions. As we know, equity investment institutions are an important force in early-stage, small-scale, long-term, and hard technology investments. However, these institutions are often asset-light and have relatively long investment cycles. In the past, such institutions rarely financed through bond issuance, and investors were relatively cautious about the bonds issued by these equity investment institutions, resulting in relatively high financing costs. To support equity investment institutions in issuing bonds, we have specifically created a risk-sharing tool for technology innovation bonds, with the People's Bank of China providing low-cost re-lending funds, along with local governments and market-oriented credit enhancement institutions, to provide guarantees and create credit risk mitigation certificates for equity investment institutions issuing bonds, among other incremental support. In addition, the risk-sharing tool also supports the issuance of technology innovation bonds through direct investment.

As of June 30, there were 27 equity investment institutions in the interbank market that issued technology innovation bonds totaling 15.35 billion yuan. It is particularly noteworthy that five private equity investment institutions obtained credit enhancement from the risk-sharing tool, achieving three policy effects: First, longer bond maturities. Through some diversified maturity settings with rights, these equity investment institutions were able to issue bonds with maturities of 5 years, and up to 10 years, which better matched the characteristics of equity investment fund usage and financing needs. Second, lower issuance costs. The bond issuance interest rates for these private equity investment institutions ranged from 1.85% to 2.69%, which is relatively low, and market subscriptions were very enthusiastic. It should be noted that since the bonds issued by these equity investment institutions are guaranteed by the risk-sharing tool, the issuance interest rates reflect the credit of the risk-sharing tool, which significantly reduces the bond financing costs for private equity investment institutions. Third, effectively promoting the formation of innovative capital. The equity investment institutions that successfully issued bonds generally have rich investment experience, outstanding management performance, and excellent management teams, making them an important force in early-stage, small-scale, long-term technology, and hard technology investments. Equity investment institutions will use the bond issuance funds for the establishment and expansion of private equity investment funds, effectively playing the leading role of fund managers and better driving social capital investment in the science and technology innovation field.

In the next step, the People's Bank of China will work with relevant departments to continue to make good use of the risk-sharing tool for technology innovation bonds, leveraging the joint efforts of the central and local governments to jointly promote the development of the technology innovation bond market, cultivate and improve the financial market ecosystem that supports technological innovation, and provide stronger financial support for high-level technological self-reliance and self-improvement.

Thank you.

Hongxing News Reporter:

What highlights can be seen in the growth of social financing scale and money supply in the first half of this year? How do you view this? Thank you.

Zou Lan:

Thank you. I will ask Director Yan Xiandong from the Survey and Statistics Department to answer this question.

Yan Xiandong:

Since the beginning of this year, the People's Bank of China has earnestly implemented the decisions and deployments of the Party Central Committee and the State Council, implementing a moderately loose monetary policy and maintaining ample liquidity.

From the financial aggregate data in the first half of the year, the social financing scale and money supply have shown stable growth, matching the expected targets for economic growth and overall price levels. By the end of June, China's social financing scale and broad money supply M2 had increased by 8.9% and 8.3% year-on-year, respectively, with growth rates 0.8 and 2.1 percentage points higher than the same period last year The incremental growth of social financing scale is reasonable, and the financial system has better met the funding needs of the real economy. In the first half of the year, the incremental social financing scale was 22.83 trillion yuan, an increase of 4.74 trillion yuan year-on-year. On one hand, proactive fiscal policies have taken effect early, and the financial system has strengthened its cooperation, with government bond financing increasing significantly year-on-year. In the first half of the year, net financing of government bonds was 7.66 trillion yuan, an increase of 4.32 trillion yuan year-on-year. Among them, net financing of treasury bonds was 3.37 trillion yuan, an increase of 1.8 trillion yuan year-on-year; net financing of local government bonds was 4.29 trillion yuan, an increase of 2.52 trillion yuan year-on-year. On the other hand, financial institutions' credit support for the real economy remains solid. In the first half of the year, financial institutions issued 12.74 trillion yuan in RMB loans to the real economy, an increase of 279.6 billion yuan year-on-year.

The broad money supply M2 has rebounded compared to the same period last year, maintaining ample liquidity. First, government bonds were issued in advance, and financial institutions' bond investments increased significantly, leading to an increase in corresponding money creation. In the first half of the year, there were many government bond issuances, and financial institutions' bond investments increased by 6.01 trillion yuan, an increase of 3.19 trillion yuan year-on-year. Second, stable growth in credit also supports money creation. In addition, measures taken last year to rectify fund idling resulted in a lower base for money supply in the same period last year. This year, the growth of corporate deposits has recovered, driving an increase in the growth rate of money supply. In the first half of the year, corporate deposits increased by 1.77 trillion yuan, an increase of 3.22 trillion yuan year-on-year.

Overall, the financial total in the first half of the year has grown reasonably, strongly supporting the recovery and improvement of the real economy.

Thank you.

Economic Daily Reporter:

What is the financing situation for small and medium-sized enterprises and private enterprises in the first half of this year? What arrangements does the People's Bank of China have for supporting financial services for small and medium-sized enterprises and private enterprises in the next steps? Thank you.

Zou Lan:

Thank you, I will ask Director Peng Lifeng of the Credit Market Department to answer this question.

Peng Lifeng:

Thank you for your question. Supporting the financing development of private and small and medium-sized enterprises is a necessary requirement for doing a good job in inclusive finance and helping to achieve common prosperity. In recent years, the People's Bank of China has focused on key areas of inclusive finance such as private and small and medium-sized enterprises, in accordance with the decisions and deployments of the Party Central Committee and the State Council, starting from policy guidance, financial support, and capacity building, continuously improving the financial support system and mechanism, and enhancing the accessibility, inclusiveness, and convenience of enterprise financing.

First, increase support for financing of private and small and medium-sized enterprises. First, ensure the implementation of the "25 measures" for financial support of the private economy, promote the construction of financial service capabilities, regularly conduct policy effect evaluations, and guide financial institutions to firmly establish the concept of "equal treatment." As of the end of May this year, the balance of inclusive micro loans was 34.42 trillion yuan, an increase of 11.6% year-on-year, with an average annual growth rate of over 20% in the past five years; the balance of loans to privately held enterprises was 44.95 trillion yuan.

Second, promote a stable decrease in financing costs for private and small and medium-sized enterprises. Use a variety of monetary policy tools comprehensively to maintain ample liquidity. Continuously release the effectiveness of the loan market quotation rate, namely the LPR reform and the market-oriented adjustment mechanism for deposit rates, pilot the work of clarifying the comprehensive financing costs of corporate loans, and promote a stable decrease in the comprehensive financing costs for private and micro enterprises. As of May 2025, the weighted average interest rates for newly issued inclusive micro enterprise loans and privately held enterprise loans were 3.69% and 3.45%, respectively Decreased by 0.66 and 0.6 percentage points compared to the same period last year.

Third, support for financing of private and small and medium-sized enterprises (SMEs) has become more diversified. Leverage the guiding role of bond financing support tools for private enterprises, providing credit enhancement support for private enterprises issuing bonds. Encourage financial institutions to issue financial bonds for small and micro enterprises, with funds specifically used to support financing for small and micro enterprises. Establish and actively promote a unified registration and public announcement system for movable property and rights guarantees to facilitate financing for SMEs.

In the next step, the People's Bank of China will continue to improve financial services for private and small and medium-sized enterprises mainly in the following areas:

First, further improve the policy system for financial support for private and small micro enterprises. Carry out a financial service capability enhancement project to guide reasonable growth of inclusive small micro loans and loans for the private economy. Improve the credit enhancement system for private SMEs, fully utilize the positive roles of government financing guarantees, information sharing, and financial derivatives to enhance the availability of financing for enterprises.

Second, continue to increase the input of financial resources. Implement a moderately loose monetary policy, effectively use structural monetary policy tools such as re-loans for supporting agriculture and small enterprises, and re-loans for technological innovation and technological transformation, promote the standardized development of supply chain finance, and increase financial support for private small and micro enterprises.

Third, assist enterprises in efficient financing connections. Strengthen communication and cooperation with industry regulatory authorities to help financial institutions improve financing connection efficiency. Fully promote the national credit information sharing platform for the flow of funds for small and micro enterprises, supporting credit funds to accurately reach credit white households and other inclusive areas.

Thank you.

Xing Huina:

Please continue to raise your hands to ask questions, the last question.

Financial Times Reporter:

What is the implementation status of structural monetary policy tools? Are there plans to increase or add to them this year? Thank you.

Zou Lan:

I will answer this question. According to the goals and requirements for high-quality economic development, in recent years, the People's Bank of China has drawn on international experience and combined it with domestic realities. While implementing total volume policies, it has created and implemented a number of structural monetary policy tools focused on supporting major strategies, key areas, and weak links, to further enhance the adaptability and precision of financial services for economic structural adjustment and high-quality economic development. Structural policy tools have achieved full coverage of various fields of the financial "five major articles," while strongly supporting the stable and healthy development of the real estate market, capital market, and other areas.

In May of this year, the People's Bank of China launched a new package of financial policy measures, many of which are structural policy tools, to strengthen support for promoting economic structural transformation and upgrading.

First, a re-loan for service consumption and elderly care and a risk-sharing tool for technology innovation bonds were created. The re-loan for service consumption and elderly care is set at 500 billion yuan, specifically used to incentivize and guide financial institutions to increase financial support for key areas of service consumption and the elderly care industry, which was also introduced by Director Peng Lifeng earlier. The risk-sharing tool for technology innovation bonds supports equity investment institutions in issuing technology innovation bonds for financing, while also supporting the construction of the "technology board" in the bond market.

Second, in terms of quantity, the limits of some tools have been increased and optimized. The limits for re-loans for technological innovation and technological transformation, as well as for supporting agriculture and small enterprises, have each been increased by 300 billion yuan, and the 500 billion yuan limit for securities, funds, and insurance companies' swaps has been merged with the 300 billion yuan limit for stock repurchase and increase re-loans Thirdly, in terms of pricing, the re-lending interest rate has been lowered. The interest rates for re-lending to support agriculture and small enterprises, mortgage supplementary loans, and various special structural monetary policy tools have been reduced by 0.25 percentage points.

These structural policy measures have all been implemented and launched by the end of May, continuously playing a positive role. For example, as of the end of May, the contract amount for loans for technological innovation and technological transformation has reached 17.4 trillion yuan, and enterprises can withdraw funds for use at any time. The risk-sharing tool for technological innovation bonds has provided effective credit enhancement support for equity investment institutions to issue bonds for financing. As of the end of June, 27 equity investment institutions in the interbank market have issued technological innovation bonds totaling over 15 billion yuan.

In the next step, we will also make good use of the dual functions of monetary policy tools in terms of both total volume and structure. Structural monetary policy tools will continue to adhere to the principles of "focusing on key areas, being reasonable and moderate, and having both advances and retreats," highlighting support for technological innovation and boosting consumption, further enhancing the effectiveness of promoting economic structural adjustment, transformation and upgrading, and the conversion of old and new driving forces.

Thank you.

Xing Huina:

This concludes today's press conference. Thank you to Vice President Zou Lan and the speakers, and thank you to all media friends. Goodbye, everyone!

This article is compiled from "China.com," edited by Jiang Yuanhua of Zhitong Finance