Xu Wei

27 Dec 2021

(Yicai Global) Dec. 27 — China’s central bank has pledged to promote the real estate market’s healthy development, saying it will safeguard the legitimate rights and interests of homebuyers and better meet their reasonable housing needs.

The People’s Bank of China made the commitment at its fourth-quarter monetary policy committee meeting on Dec. 24, according to an announcement the next day.

Structural monetary policy tools should be used with precision to transform those policy tools linked to the real economy into market-oriented tools that are beneficial to small and micro enterprises as well as individual industrial and commercial households, the PBOC said.

Special refinancing will be used to reduce carbon emissions and encourage green and high-efficient coal application, the bank said, adding that it will guide financial institutions to boost support for small and micro firms, tech innovation and eco-friendly development.

The PBOC will encourage increased lending to the manufacturing sector to ensure that financial support for private enterprises is compatible with their contribution to economic and social development, accelerating the realization of a green financial system aimed at peak carbon-dioxide emissions and carbon neutrality.

The meeting noted that the global pandemic situation was still evolving, with the external environment more complex and uncertain, so that the domestic economy is facing the triple pressures of a contraction in demand, supply shocks and weakening expectations.

It is necessary to make overall plans for the convergence of macro policies from this year to next to support high-quality economic development, the PBOC said, adding that prudent monetary policies should be flexible and moderate, supporting the real economy more while maintaining reasonable and sufficient liquidity.

Besides that, growth in the money supply and size of social financing should keep pace with the gain in nominal gross domestic product and the macro leverage ratio should be basically stable for a steady macro economy.

The PBOC also said it is necessary to support banks to replenish capital. It will optimize the policy interest rate system and strengthen the supervision of deposit rates, lowering the financing costs of businesses with loan prime rate reforms.

The central bank will deepen the market-oriented reform of the yuan exchange rate and enhance its flexibility, it said. The PBOC also will guide companies and financial institutions to strengthen the management of expectations, and maintain the basic stability of the yuan exchange rate at a reasonable and balanced level.

Editor: Peter Thomas