PBOC Continues Moderately Loose Monetary Policy And Strengthens Countercyclical And Cross‑Cyclical Adjustments

The People’s Bank of China convened its 2026 work conference from January 5 to 6, guided by Xi Jinping Thought on Socialism With Chinese Characteristics for a New Era. The meeting reviewed the outcomes of 2025, assessed current domestic and international economic and financial conditions, examined the central bank’s reform and development plan for the “15th Five‑Year Plan” period, and set priorities for 2026. Pan Gongsheng, Party Secretary and Governor of the People’s Bank of China, delivered remarks at the conference; Zhu Hexin, Qu Jishan, Xuan Changneng, Lu Lei, Tao Ling and Zou Lan were among the attendees.

Participants concluded that, amid a complex and severe external and domestic environment in 2025, the central bank faithfully implemented the decisions of the CPC Central Committee and the State Council. Building on existing monetary policy, the PBOC introduced a new package of measures that materially supported stable growth in the real economy and the orderly functioning of financial markets. The bank continued to advance supply‑side structural reforms in finance, managed risks in key areas prudently, promoted improvements in global financial governance, and deepened internal Party governance, achieving notable progress across its mandate.

The conference emphasized a macro‑system perspective in planning major business and reform initiatives, accelerating the improvement of the central banking framework and advancing work on six core elements, the construction of monetary and macro‑prudential policy frameworks, financial market development, and the internationalization of the renminbi. The PBOC will formulate concrete implementation plans and apply dynamic evaluation to refine these efforts.

Monetary policy was characterized as professional, pragmatic and precise, with a continued orientation toward moderate ease. The bank committed to enhancing the alignment and targeting of policy measures with market concerns, deploying a comprehensive toolkit that includes reductions in reserve requirement ratios and open market operations to maintain ample liquidity. Policy rates, rates on structural monetary instruments and personal housing provident fund loan rates will be adjusted to help lower overall financing costs. The PBOC will strengthen policy execution and supervision, improve interest‑rate self‑discipline mechanisms, refine the monetary policy framework, and guide money‑market rates to operate more stably around policy rates through enhanced market communication and expectation management.

International financial cooperation remains a priority, with the PBOC advocating head‑of‑state diplomacy to advance global governance initiatives and deepen multilateral and bilateral financial collaboration. The bank will actively participate in G20 mechanisms and support the opening of the IMF Shanghai Center, while focusing on global macroeconomic policy coordination and regional financial safety‑net development.

Improving the quality and efficiency of financial services for high‑quality development was another central theme. The PBOC will完善 the policy framework for the financial sector’s five major areas, strengthen statistical and evaluation systems, and expand re‑lending quotas for technological innovation and agricultural and small‑business support. The bond market will see the introduction of a “Technology Board,” accompanied by risk‑sharing tools for innovation bonds and targeted re‑lending for consumption and pension services. Financial policy instruments will be optimized to support technological advancement and the construction of a modern industrial system, with continued emphasis on financing quality for technology, green, inclusive finance, elderly care and digital economy sectors. To date, more than 700 entities have issued technology innovation bonds totaling over RMB 1.5 trillion.

The conference reported steady progress in containing financial risks in priority areas. Financial markets have remained stable, and the PBOC has optimized two monetary policy tools that support capital markets while affirming Central Huijin’s role as a quasi‑stabilization vehicle to bolster market confidence. Bond‑market monitoring and expectation management have been strengthened, enforcement against market misconduct intensified, and comprehensive measures implemented to maintain orderly foreign‑exchange market functioning. Notable advances have been made in resolving financing‑platform debt risks, and the handling of risks at key institutions and regions has proceeded in a measured manner. The establishment of the PBOC Macro‑Prudential and Financial Stability Committee further enhances the macro‑prudential and financial‑stability toolkit, and oversight of financial infrastructure has been reinforced.

The PBOC reiterated its commitment to high‑level financial opening. The bank will refine pre‑entry national treatment and negative‑list management, support qualified foreign financial institutions to pilot new businesses in China, and advance institutional opening of financial markets. Efforts will continue to improve connectivity between domestic and international markets, facilitate broader investor access to China’s financial markets, and enhance cross‑border renminbi usage arrangements. The PBOC will also support the issuance of panda bonds by eligible overseas entities and expand interconnection of fast payment systems, including QR‑code interoperability.

Enhancing financial governance and service capabilities was highlighted through accelerated legislative and regulatory work, including revisions to the PBOC Law, Financial Stability Law and Commercial Bank Law. The bank will develop financial statistics and standards aligned with a modern central bank system, deepen monitoring of key areas such as the financial sector’s five major themes and financing‑platform debt, and consolidate achievements in cash‑use management. Measures to improve treasury management, implement a one‑time personal credit repair policy, and strengthen the social credit system will be advanced. Payment‑service optimization for seniors and foreign residents, stringent oversight of payment institutions, reinforced virtual‑currency regulation, and continued efforts to combat related illegal activities were also underscored. The PBOC will further promote digital‑RMB development and refine its management framework.

The conference reaffirmed the imperative to deepen strict Party governance within the central bank. This includes institutionalizing the “first agenda” mechanism, studying and publicizing Xi Jinping’s financial governance discourse and practice, and implementing the Fourth Plenary Session’s spirit through education and training. The PBOC will consolidate central inspection rectifications, strengthen leadership and talent development, and maintain rigorous anti‑corruption and discipline enforcement. Internal management will be standardized, post‑reform organizational adjustments advanced prudently, and oversight of branches and subordinate units enhanced. Internal audit, centralized procurement and fund management will be reinforced, and support functions such as unions, youth organizations, retired staff services, logistics and security will be improved.

The meeting directed the PBOC to adhere to Xi Jinping Thought, fully implement the decisions of the 20th CPC National Congress and subsequent plenary sessions, and execute the Central Economic Work Conference’s policy agenda. The bank is to maintain the principle of pursuing progress while ensuring stability, continue a moderately loose monetary stance, integrate incremental and stock policy effects, and intensify countercyclical and cross‑cyclical adjustments. Emphasis was placed on enhancing the effectiveness of financial services for high‑quality economic development, deepening financial reform and opening, improving macro‑policy foresight, precision and coordination, expanding domestic demand, optimizing supply, and preventing and resolving risks to stabilize expectations. These measures aim to create a supportive monetary and financial environment for steady growth, high‑quality development and stable financial markets, thereby providing robust financial backing for a successful start to the “15th Five‑Year Plan.”

For 2026, the PBOC will sustain strict Party governance, continue to implement a moderately loose monetary policy to ensure ample liquidity and relatively accommodative financing conditions, and refine the structural monetary policy toolkit to better support domestic demand, technological innovation and small‑ and micro‑enterprises. The bank will proceed cautiously in resolving debt risks associated with financing platforms, strengthen early identification and remediation of risks at smaller financial institutions, and enhance macro‑prudential management and financial‑stability instruments. Financial reform and opening will be advanced steadily, with improvements to market connectivity and cross‑border renminbi infrastructure. The PBOC will also promote reforms in global financial governance through multilateral cooperation and further elevate financial management, legislation, statistics, payment systems and digital‑RMB capabilities.

The conference noted that 2026 marks the opening year of the “15th Five‑Year Plan,” and called on the PBOC to implement central directives with diligence, professionalism and a results‑oriented approach to drive high‑quality financial development and ensure a strong start to the planning period.

Representatives from the State Administration of Foreign Exchange, senior officials from PBOC departments, branches and affiliated units, the dispatched discipline inspection and supervision team, and invited delegates from the Central Organization Department, the Office of the Central Financial and Economic Affairs Commission, the Office of the Central Financial Commission, the General Office of the State Council and the Ministry of Finance attended the conference.