The central bank announces: reserve requirement ratio cut, interest rate cut, reduction of existing mortgage interest rates.

On September 24th, the State Council Information Office held a press conference on the financial support for high-quality economic development. Pan Gongsheng, the Governor of the People's Bank of China, announced the following policies: First, to lower the reserve requirement ratio and policy interest rates, and drive down the market benchmark interest rates. Second, to lower existing housing loan rates and unify the minimum down payment ratio for housing loans. Third, to create new monetary policy tools to support the stable development of the stock market. Firstly, the reserve requirement ratio will be lowered by 0.5 percentage points in the near future, providing the financial market with long-term liquidity of around 1 trillion yuan; within this year, depending on the market liquidity conditions, there may be further reductions of 0.25-0.5 percentage points. Lowering the central bank's policy interest rate, the 7-day reverse repurchase operation rate will be reduced by 0.2 percentage points, from the current 1.7% to 1.5%, while guiding loan market quoted interest rates and deposit interest rates to decline in sync, maintaining stable net interest margins for commercial banks. Secondly, lower existing housing loan rates and unify the minimum down payment ratio for housing loans. Commercial banks will be encouraged to lower existing housing loan rates to near the rates of newly issued loans, with an average estimated decrease of around 0.5 percentage points. The minimum down payment ratio for second housing loans nationwide will be reduced from the current 25% to 15%. The support ratio of 300 billion yuan affordable housing refinancing created by the People's Bank of China in May will be increased from the original 60% to 100%, enhancing market incentives for banks and acquiring entities. The policy documents of operating property loans due at the end of the year and the "16 Financial Measures" will be extended to the end of 2026. Originally, these two documents were set to expire at the end of this year. We, together with the China Banking and Insurance Regulatory Commission, have extended these two documents to the end of 2026. Thirdly, create new monetary policy tools to support the stable development of the stock market. The first is to create securities, funds, and insurance companies exchange convenience, supporting eligible securities, funds, and insurance companies to obtain liquidity from the central bank through asset pledging, significantly increasing institutional funding capabilities and stock holding capabilities. The second is to establish a special repurchase loan for stock repurchase and holding, guiding banks to provide loans to listed companies and major shareholders to support stock repurchases and holdings. Li Yunze, Director of the China Banking and Insurance Regulatory Commission, stated that according to the relevant deployment of the State Council, in order to effectively play the leading role of pilot programs and encourage the development of venture capital, we propose to take the following measures to promote it: First, expand the scope of pilot cities. We will work with relevant departments to research the expansion of the pilot scope from Shanghai to 18 large and medium-sized cities with active science and technology innovation. Second, relax restrictions. Appropriately increase the amount and proportion of equity investments, with the proportion of on-balance-sheet investments raised from 4% to 10%, and the proportion of investments in single private equity funds raised from 20% to 30%. Third, optimize evaluations. Guide relevant institutions to implement the requirements of due diligence exemption, establish and improve a long-term, differentiated performance evaluation system. Next, we will summarize experiences in a timely manner, continue to research the expansion of the scope of pilot cities, while continuously optimizing supporting policies and actively promoting the implementation of more projects. The text transcript is as follows: Spokesperson for the State Council Information Office and Director of the Press Office, Shou Xiaoli: Ladies and gentlemen, good morning. Welcome to the press conference held by the State Council Information Office. We are very pleased to invite Governor of the People's Bank of China, Mr. Pan Gongsheng, Director of the China Banking and Insurance Regulatory Commission, Mr. Li Yunze, and Chairman of the China Securities Regulatory Commission, Mr. Wu Qing, to introduce the relevant situation of financial support for high-quality economic development and answer your questions. Now, please allow Mr. Pan Gongsheng to give an introduction. Governor of the People's Bank of China, Pan Gongsheng: Thank you, Director Shou Xiaoli. Ladies and gentlemen of the press, good morning! It is a great pleasure to meet with you again and I would like to thank you for your long-standing attention and support for the reform and development of the financial industry and the various work of the People's Bank of China! Since the beginning of this year, the People's Bank of China has adhered to the fundamental principle of serving the real economy with finance, maintained a supportive monetary policy stance and policy orientation, and implemented relatively significant monetary policy adjustments in February, May, and July. In terms of the overall level of monetary policy, we have comprehensively used various monetary policy tools such as lowering the reserve requirement ratio, reducing policy interest rates, and guiding loan market quoted interest rates to create a favorable monetary and financial environment. In the structural aspect of monetary policy, we have focused on key areas of high-quality development, established technology innovation and technological transformation refinancing, increased financial support for technology innovation and equipment update and transformation. We have lowered the down payment ratio and interest rates for mortgage loans, reduced the interest rate for provident fund loans, and established affordable housing refinancing to accelerate the destocking of existing commercial housing through market-oriented means. In terms of monetary policy transmission, we have promoted the reform of calculating the quarterly value-added of the financial industry, changing from the previous method of calculation mainly based on the growth rate of deposits and loans to income-based calculation. We have rectified and standardized manual interest adjustments and fund turnover, revitalized inefficient financial resources, improved the efficiency of fund utilization, and enhanced the transmission efficiency of monetary policy. In terms of the exchange rate, we adhere to the decisive role of the market in determining the exchange rate, maintain exchange rate flexibility, strengthen expectation guidance, and keep the RMB exchange rate basically stable at a reasonable and balanced level. The effectiveness of monetary policy continues to show. By the end of August, the scale of social financing increased by 8.1% year-on-year, RMB loans increased by 8.5% year-on-year, about 4 percentage points higher than the nominal GDP growth rate, and financing costs are at historical lows. According to the central government's decision-making arrangements, in order to further support stable economic growth, the People's Bank of China will firmly adhere to a supportive monetary policy stance, intensify the strength of monetary policy regulation, enhance the precision of monetary policy regulation, and create a favorable monetary and financial environment for stable and high-quality development of the economy. Pan Gongsheng: With the help of today's press conference, I announce the following policies: First, lower the reserve requirement ratio and policy interest rates, and drive down market benchmark interest rates. Second, lower existing housing loan rates and unify the minimum down payment ratio for housing loans. Third, create new monetary policy tools to support the stable development of the stock market.Policy interest rate. The reserve requirement ratio will be lowered by 0.5 percentage points in the near future, providing about 1 trillion yuan of long-term liquidity to the financial market; depending on the market liquidity conditions throughout the year, there may be opportunities to further reduce the reserve requirement ratio by 0.25-0.5 percentage points. Lowering the central bank's policy interest rate involves lowering the 7-day reverse repurchase operation rate by 0.2 percentage points, from the current 1.7% to 1.5%, while guiding loan market quoted rates and deposit rates to decrease simultaneously, maintaining stability in the net interest margins of commercial banks. : The Ministry of Finance has strictly cracked down on PricewaterhouseCoopers, the auditing firm of Evergrande Real Estate, forming a powerful deterrent. Just now, it was also mentioned that the expected loan market quoted interest rates, deposit rates will symmetrically decline. The deposit rates from the previous few times, through the interest rate self-discipline mechanism, the repricing effect formed by guiding the deposit rates downward will gradually become evident. Because repricing of deposit rates is slower than loans, so the effect of repricing will accumulate over time with the previous few times guiding the deposit rates downward. Therefore, in the design of policy adjustments, the technical team of the People's Bank of China has conducted multiple rounds of careful quantitative analysis and evaluation. The impact of this interest rate adjustment on bank profits is neutral, and the net interest margin of banks will remain basically stable. Thank you! Measures to promote: first, expand the scope of pilot cities. We will work with relevant departments to study expanding the pilot scope from the original Shanghai to 18 large and medium-sized cities with active technological innovation such as Beijing. Second, relax restrictions. Appropriately relax the equity investment amount and ratio restrictions, increase the proportion of on-balance sheet investments from 4% to 10%, and increase the proportion of investments in single private equity funds from 20% to 30%. Third, optimize assessment. Guide relevant institutions to implement the requirements of due diligence and establish a sound long-term, differentiated performance assessment. Next, we will timely summarize experiences, continue to study expanding the scope of pilot cities, and continuously optimize supporting policies to actively promote more projects to land as soon as possible.I will stop my answer here, thank you everyone. Reuters reporter: Despite the Chinese government implementing many policies to attract home buyers and reduce mortgage burdens for homeowners, housing prices in China are still declining, with double-digit drops in total prices in some cities. My question is, does the Chinese financial regulatory agency believe it is time to introduce monetary policies? Thank you. Pan Gongsheng: Thank you for your question. This is a very good question and one that is widely concerned about in society. We mainly focus on supporting the risk mitigation and healthy development of the real estate market from a financial perspective based on our own responsibilities. In recent years, the People's Bank of China has continually improved macro-prudential policies for real estate finance, adopting a comprehensive approach from both supply and demand sides. We have multiple times adjusted down the minimum down payment ratio for personal housing loans, reduced loan interest rates, abolished the lower limit of interest rate policies, and established refinancing support for affordable housing purchases of existing commercial properties. To implement the central decisions to promote stable and healthy development of the real estate market, the People's Bank of China and the China Banking and Insurance Regulatory Commission have introduced five new policies for real estate finance. The first policy is guiding banks to lower interest rates on existing housing loans. In August last year, the People's Bank of China encouraged commercial banks to orderly lower interest rates on existing housing loans, which had a good effect. After the policy lower limit on national mortgage rates was lifted on May 17th this year, the previous calculation based on the LPR for mortgage loans was removed. New mortgage rates are now based on market quoted rates with a larger discount, leading to a significant decrease in interest rates and widening of the interest rate spread between new and existing mortgage loans. Especially in big cities like Beijing, Shanghai, Shenzhen, and Guangzhou, the previous interest rate spread was high, but after the adjustment, the interest rate spread between new and existing mortgage loans has widened further. The People's Bank of China intends to guide banks to adjust interest rates on existing housing loans in batches towards the levels of new loans, with an average expected decrease of around 0.5 percentage points. Lowering interest rates on existing housing loans will help further reduce borrower's interest expenses and benefit around 50 million households and 150 million people, reducing total interest expenses by approximately 150 billion yuan annually. This will help promote expanded consumption and investment, reduce early loan repayments, and limit illegal refinancing of existing housing loans, protecting the legitimate rights of financial consumers and maintaining stable and healthy development of the real estate market. We will officially release this document soon. Because there are many borrowers involved, banks also need some time for necessary technical preparations, so it may be difficult for banks to handle this immediately. Therefore, please do not rush to the banks this afternoon. Next, we are also considering guiding commercial banks to improve the pricing mechanism for mortgage loans, allowing for dynamic adjustments based on market principles through mutual negotiation between banks and customers. The second policy is to unify the minimum down payment ratio for housing loans to 15%. To better support the rigid and diversified needs of urban and rural residents to improve their housing situations, nationwide commercial personal housing loans will no longer differentiate between first-time and second-time homebuyers, with a unified minimum down payment ratio of 15%. After May 17th, the down payment for first-time buyers was already at 15%, and for second-time buyers, it was 25%. This time, the down payment for both first-time and second-time buyers has been unified at 15%. I would like to explain two points here: regions can formulate policies based on their specific circumstances and independently determine whether they will implement differentiated arrangements and set minimum down payment ratios within their jurisdictions. Since the real estate market conditions vary greatly between different cities and regions nationwide, local governments can make differentiated arrangements based on the national baseline and set minimum down payment ratios within their jurisdictions. Another point is that commercial banks can negotiate specific down payment levels with customers based on their risk profiles and preferences. Because 15% is only the minimum down payment ratio, commercial banks may adjust this based on risk assessments, and some customers may opt for higher down payment levels, which will be determined through market negotiations between commercial banks and individuals. The third policy is to extend the deadlines of two real estate financial policy documents. Previously, the People's Bank of China and the China Banking and Insurance Regulatory Commission introduced policies such as the "16 Financial Measures" and financing for operating properties, which played a positive role in promoting stable and healthy development of the real estate market and mitigating risks. Specifically, the financing extension for real estate companies and operating property loans, which were set to expire on December 31, 2024, have now been extended to December 31, 2026. The fourth policy is to optimize the policy for refinancing affordable housing. On May 17th, the People's Bank of China announced the establishment of a 300 billion yuan refinancing program for affordable housing, encouraging financial institutions to support local state-owned enterprises in purchasing completed but unsold commercial properties at reasonable prices for use as affordable housing for sale or rent. This is an important measure to reduce housing inventory in the real estate market. To further incentivize banks and purchasing entities with market mechanisms, we have increased the People's Bank of China's financing ratio in affordable housing refinancing policies from 60% to 100%. Previously, if a commercial bank loaned out 100 billion yuan, the People's Bank would provide 60 billion yuan. Now, if a commercial bank loans out 100 billion yuan, the People's Bank will provide low-cost funds of 100 billion yuan, accelerating the process of clearing unsold commercial properties. The fifth policy is to support the acquisition of real estate developers' existing land. Building on the use of some local government special bonds for land reserves, we are studying the allowance of policy banks and commercial banks to provide loans to support market-conditioned acquisition of land from real estate developers, activating existing land resources and alleviating funding pressures on real estate developers. When necessary, the People's Bank may provide refinancing support. We are still studying this policy with the China Banking and Insurance Regulatory Commission. Thank you! Beijing Youth Daily reporter: Regarding micro and small enterprises.We have noticed that in recent times, the government has introduced many supportive policies regarding financing for small and micro enterprises, and financial institutions have also increased their service efforts. The financing of small and micro enterprises has shown a trend of increasing quantity, expanding scope, and stabilizing prices. However, at the same time, some small and micro enterprises have also reported that they still face obstacles and bottlenecks. We would like to know if the financial regulatory authorities have any targeted measures in this regard. Thank you.Thank you for your question. Small and micro enterprises are an important force in stabilizing the economy, promoting employment, and improving people's livelihoods. In recent years, we have worked with the People's Bank of China to continuously strengthen policy guidance and coordinate efforts from all parties to improve financing services for small and micro enterprises. As of the end of August this year, the balance of inclusive small and micro enterprise loans nationwide reached 31.9 trillion yuan, doubling from the end of 2017, and the average interest rate has also cumulatively decreased by 3.5 percentage points. To further address the financing bottlenecks for small and micro enterprises, the administration will take measures in two key areas: First, we will establish a working mechanism with the National Development and Reform Commission to support the coordination of small and micro enterprise financing. This mechanism, drawing on the experience of previous real estate financing coordination mechanisms, will establish working teams at the district and county level. These teams will reach out to thousands of enterprises, gaining a deep understanding of the operational status and actual difficulties of small and micro enterprises, especially comprehensively identifying the financing needs of these enterprises. They will also connect with banks, recommending small and micro enterprises that operate legally, have genuine financing needs, and have good credit to banking institutions. Banks should promptly approve credit within one month, ensuring that credit funds reach small and micro enterprises, truly bridging the "last mile" of benefiting enterprises and the people. Second, we will optimize the policy of non-repayment continuance loans. In 2014, the former China Banking Regulatory Commission issued a continuance loan policy for small and micro enterprises, commonly known as "Document 36", which allows eligible small and micro enterprises with financing needs after their loans mature to apply for continuance loans. In other words, small and micro enterprises can continue financing without repaying principal when their loans mature, a service known as non-repayment continuance loans. This policy has been welcomed by small and micro enterprises and has played a positive role in promoting their financing. We will further optimize the continuance loan policy in three aspects: First, the scope of continuance loans will be expanded from partial small and micro enterprises to all small and micro enterprises, allowing all eligible enterprises with genuine financing needs and financial difficulties to apply for continuance support after their loans mature. Second, the period of continuance loans will be extended to medium-sized enterprises for a temporary period of three years. This means that medium-sized enterprises with working capital loans maturing before September 30, 2027, can follow the continuance loan policy for small and micro enterprises. Third, the risk classification criteria will be adjusted to allow loans to law-abiding, continuously operating, and creditworthy enterprises to have their classification continue even after being granted continuance loans. To ensure the effective implementation of relevant support policies for small and micro enterprises, especially addressing the concerns of grassroots credit personnel in conducting credit business for small and micro enterprises, the administration recently released a due diligence exemption system for inclusive credit, detailing the circumstances of due diligence exemption to fully arouse the enthusiasm and initiative of grassroots workers and strive to establish a long-term mechanism for daring, willing, able, and knowledgeable lending. That's all I have to answer, thank you. Reporter from the First Financial Channel: Earlier this year, we saw the establishment of the Urban Real Estate Financing Coordination Mechanism. I would like to know what the latest developments and achievements are and what new considerations and measures are being taken? Thank you. Li Yunze: Thank you for your question. Just now, Chairman Pan gave a comprehensive and systematic answer to this year's financial policies related to the real estate sector because the stable and healthy development of the real estate market is crucial to the overall economy, finance, and the immediate interests of the people. In recent years, there have been significant changes in the supply and demand relationship in the real estate market in China. The continued slowdown in sales has led to tight liquidity for real estate enterprises, making it difficult to deliver projects under construction on time. To address this issue, the administration, in collaboration with the Ministry of Housing and Urban-Rural Development, established the Urban Real Estate Financing Coordination Mechanism. The key feature of this mechanism is to focus on "cities as the main body, and projects as the center", distinguishing the risks of real estate group enterprises from the construction of real estate projects, leveraging the overall coordination role of local governments, including compliant projects under construction and already sold, into a project "white list", guiding financial institutions to meet the reasonable financing needs of real estate projects, advancing project completion and delivery, and effectively protecting the legitimate rights and interests of homebuyers. With the joint efforts of all parties, the Urban Coordination Mechanism has achieved good results. As of now, commercial banks have approved over 5700 projects on the "white list", with approved financing amounts totaling 1.43 trillion yuan, supporting the timely delivery of over 4 million housing units. Under the coordination mechanism, financial institutions' support for the real estate industry has also been expanding. By the end of August, real estate development loans this year have shown positive growth from the beginning of the year, reversing the downward trend in real estate lending. Merger and acquisition loans and housing leasing loans have also grown by 14% and 18% respectively, providing strong financial support for the stable and healthy development of the real estate market. Moreover, to actively support the demand for both rigid and improved housing, as mentioned earlier by Chairman Pan, we will guide local financial institutions to tailor relevant real estate financial policies according to local conditions. Next, we will work together with the People's Bank of China to actively promote the cautious reduction of interest rates on existing home loans, further reducing the burden of housing loan repayments for residents and improving their sense of gain. Next, we will resolutely implement the decisions and arrangements of the Party Central Committee and the State Council regarding real estate work, further promote the implementation and effectiveness of the Urban Real Estate Financing Coordination Mechanism, effectively achieve "enter to the extent needed, lend to the extent needed, and release to the extent needed", resolutely win the battle to ensure project delivery, and promote the stable and healthy development of the real estate market. Thank you, everyone. Reporter from Red Star News: The market is currently paying close attention to the mergers and acquisitions of listed companies. You just mentioned the need for multiple measures to activate the mergers and acquisitions market. In recent years, the regulatory authorities have been promoting market-oriented reforms in mergers and acquisitions. What specific measures will the China Securities Regulatory Commission take next to further enhance the efficiency and vitality of the capital market in mergers and acquisitions? Thank you. Wu Qing: Thank you for your question. Mergers and acquisitions are indeed significant events in the capital market, and promoting resource allocation through supporting corporate mergers and acquisitions to further enhance industrial integration and efficiency improvement is a very important function of the capital market. Especially against the backdrop of accelerating global industrial transformation and China's rapid economic transformation and upgrading, it is urgent to leverage the key role of corporate mergers and acquisitions to facilitate industrial integration and enhance quality and efficiency. The new "Nine Regulations" aim to activate mergers and acquisitions.Reorganizing the market has been a significant deployment. In order to further stimulate the vigor of mergers and reorganizations in the market, the China Securities Regulatory Commission, based on extensive research and listening to opinions from all parties in the previous stage, has formulated the Mergers and Acquisitions Six Measures mentioned earlier, which is the "Opinions on Deepening the Reform of the Mergers and Acquisitions Market of Listed Companies". It adheres to the direction of marketization and better leverages the role of the capital market as the main channel in mergers and reorganizations. The main content of the opinions includes: !The factors leading to the decline in interest rates also include the slow supply of government bonds issued in the previous period, as well as the lack of risk awareness, herd behavior, and amplification effects among small and medium-sized financial institutions in the market. At present, China's long-term government bond yield is hovering around 2.1%. The level of government bond yield is the result of market forces, and the People's Bank of China respects the role of the market. Additionally, without a doubt, it has created a favorable monetary environment for China to implement an active fiscal policy. PHOENIX TV: ? : QFII/RQFII !The company and trust companies are strengthening their capabilities in equity investment, issuing more long-term equity products, actively participating in the capital market, and cultivating and strengthening patient capital through multiple channels. Thank you.Economic Daily Reporter: Recently, the Central Huijin Company has significantly increased its holdings of ETFs. How does the Securities Regulatory Commission view this? Thank you. Wu Qing: Thank you for your question. The capital market is a highly transparent market. As everyone has seen, in recent times, the Central Huijin Company has continuously increased its holdings of ETFs, fully reflecting the high recognition of the investment value of the A-share market by national investment institutions. It should be said that it has played a very important role in stabilizing the market and boosting confidence. We have noticed that many domestic and foreign investment institutions and research institutions also believe that the valuation of the A-share market is at a historical low, highlighting its investment value. The Securities Regulatory Commission will work with relevant parties to further support the Central Huijin Company in increasing its holdings and expanding its investment scope, and to promote various long-term funds, including the Central Huijin Company, to invest in the stock market. Director Yunze just mentioned support for insurance companies entering the market, and we will also actively support various funds, including insurance funds, to increase their market presence and provide a better policy environment. By further enhancing strategic reserve forces, we will jointly promote the stable and healthy development of the capital market. Thank you. Shou Xiaoli: The press conference has been going on for an hour and a half. Due to time constraints, this will be the last question. Finance Times Reporter: What are the primary considerations for establishing securities, fund, and insurance swaps for easy access and special refinancing support for listed companies buybacks and major shareholders stock increases? How will the central bank carry out operations? Thank you. Pan Gongsheng: Thank you for your question. In order to maintain the stability of China's capital market and boost investor confidence, the People's Bank of China, based on international experience and its own past practices, collaborated with the Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission to create two structural monetary policy tools to support the stable development of the capital market. These are the first innovative structural monetary policy tools introduced by the People's Bank of China to support the capital market. The first tool is the swap facilitation for securities, funds, and insurance companies. This initiative supports eligible securities, funds, and insurance companies, determined by the Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission according to certain rules, to use their holdings of bonds, stock ETFs, and constituent stocks of the SSE 300 as collateral to exchange them for high-liquidity assets such as national debt and central bank bills from the central bank. National debt and central bank bills have a significant difference in credit rating and liquidity compared to other assets held by market institutions. Many institutions hold assets that currently have poor liquidity, but through exchange with the central bank, they can obtain higher quality and more liquid assets, significantly improving their ability to obtain funds and increase their holdings of stocks. We plan to start the facilitation with an initial operation size of 500 billion yuan, with the possibility of expanding it in the future. As Chairman Wu Qing mentioned, if this initiative is successful with the initial 500 billion yuan, we can introduce another 500 billion, and even a third 500 billion. This is open to flexibility. The funds obtained through this tool can only be used for investing in the stock market. The second tool is stock buyback and increase recollateralized loans. This tool directs commercial banks to provide loans to listed companies and major shareholders for buybacks and increases in company stock. In fact, repurchasing or increasing company shares by shareholders and listed companies is a very common transaction in the international capital market. The central bank will provide refinancing to commercial banks, with a support ratio of 100% and a refinancing rate of 1.75%. The loan interest rate that commercial banks can charge their clients will be around 2.25%, which is a low rate. The initial quota is 300 billion yuan, and if this tool is used effectively, as Chairman Wu Qing mentioned, we can add another 300 billion yuan, and even a third 300 billion yuan. But we need to assess the market situation and do some evaluations later. This tool applies to different types of listed companies, including state-owned enterprises, private enterprises, and mixed-ownership enterprises. The People's Bank of China will closely cooperate with the Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission, and also requires the cooperation of market institutions to jointly carry out this work. Thank you all! Shou Xiaoli: Thank you to the three speakers, and thank you to all the journalist friends for participating. The press conference ends here today. This article was selected and edited from China Net, GMTEight Editor: Chen Wenfang.