Pan Gongsheng: Advancing High-Quality Development Through Targeted Monetary Policies and Financial Stability
At the Financial Street Forum, Pan Gongsheng, Governor of the People's Bank of China (PBOC), highlighted the bank's commitment to supporting high-quality economic development. His address focused on the implementation of incremental monetary policies, achieving economic balance, and fostering systemic financial stability.
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Progress in Incremental Monetary Policies
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Pan detailed the implementation of key policies announced on September 24, designed to stabilize economic growth. Recent measures include a 0.5 percentage point reduction in the required reserve ratio (RRR) and cuts to the 7-day reverse repo and medium-term lending facility (MLF) rates. Looking forward, the PBOC plans to further adjust the RRR and loan prime rate (LPR) as necessary to maintain liquidity.
He emphasized that targeted policies have been introduced to address critical challenges, such as the real estate and capital markets. Initiatives include adjusting mortgage rates, benefiting 50 million households, and introducing instruments to stabilize the capital market. Pan noted that these actions aim to restore social confidence, stimulate demand, and support economic and financial stability.
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Balancing Growth and Quality in Economic Development
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Pan underscored the need for balanced, high-quality economic development. He noted that China has undergone significant structural adjustments, transitioning from high-speed growth to an innovation-driven model. Consumption now accounts for 56% of GDP, reflecting a steady shift in economic drivers.
He outlined three priorities for achieving balance:
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Pace vs. Quality of Growth: Striking a balance between stable economic growth and fostering new growth drivers.
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Internal vs. External Concerns: Enhancing global competitiveness amid geopolitical tensions while leveraging domestic and international markets.
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Investment vs. Consumption: Shifting focus from investment-led growth to a more consumption-driven economy.
Pan emphasized that fostering a virtuous cycle of increased consumption, market activation, and expanded investment is essential for long-term sustainability.
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PBOC's Role in Supporting High-Quality Development
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Pan highlighted four key areas where the PBOC is driving progress:
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Monetary Policy Innovation: Refining tools to ensure efficient policy transmission, including enhanced use of government bonds and structural monetary policies.
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Targeted Financial Services: Promoting financial support for technology, green initiatives, and inclusive finance to align with national strategies. Pan emphasized the importance of venture capital and private equity in supporting sci-tech innovation, particularly for start-ups.
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Financial Risk Prevention: Strengthening macro-prudential frameworks to preempt systemic risks, enhance financial stability, and improve risk monitoring mechanisms.
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Opening-Up Financial Systems: Expanding connectivity between domestic and international markets, facilitating trade and investment, and advancing RMB internationalization through market-driven principles.
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