With the resurgence of Covid-19 cases in Beijing, China says its monetary policy is providing vigorous support for the macroeconomy to withstand challenges and external headwinds.
By leveraging monetary instruments, the country has reduced financing costs for its real economy, with social financing and yuan-denominated loans sustaining an expansion, said Yi Gang, governor of the People’s Bank of China (PBOC).
Official data showed that China’s GDP increased by 3.9 percent year on year in the third quarter of 2022, up from 0.4 percent in the second quarter.
“The current economic operation indicates that we have handled our macroeconomic policy appropriately,” Yi said, adding that the policy has helped keep both economic fundamentals and prices stable.
Chinese banks have made full use of inclusive finance to shore up cash-strained businesses.
In his speech at the forum, Yi said that as of late September, the balance of inclusive loans to China’s small and micro enterprises reached 23 trillion yuan (about 3.21 trillion U.S. dollars). These loans covered nearly 54 million businesses, a quadruple increase from the end of 2017.
Besides nurturing small businesses, loan support also gives a shot in the arm to the country’s mega infrastructure projects. A case in point is in north China, where three commercial banks have recently inked an agreement with companies devoted to the transport integration of the Beijing-Tianjin-Hebei region. As per the deal, the banks would issue loans worth 50 billion yuan to an array of transport projects, such as bullet train rails, intercity highways, and airport express services.
Under the aegis of the central bank, local financial institutions have helped the northern region attract outstanding financing of over 3 trillion yuan for its coordinated development over the past six years, the PBOC data showed.
With regard to the property industry, an underpinning of China’s real economy, Yi said that the central bank has made multi-pronged efforts to bolster its development, and it encourages local governments’ region-specific policies, such as lowering mortgage rates and advance payments for homebuyers.
The PBOC has also launched a 200-billion-yuan loan scheme to guarantee housing completion, with more policy tools being created toward the end, including the issuance of risk-sharing bonds to private property developers.
Amid efforts to stabilise economic growth, China’s financial institutions are utilizing all types of financial tools that have effectively driven up demand for loans, said Wen Bin, chief economist with China Minsheng Bank.
