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December 29, 2021

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Central bank governor spells out economic plan for 2022

AS China has mapped out priorities for the economic work of 2022 at a key meeting earlier this month, the country’s central bank governor Yi Gang elaborated on the bank’s agenda for the coming year.

Yi, governor of the People’s Bank of China, talked about stronger financial support for the real economy and carbon-neutrality goals.

Economic work should prioritize stability while pursuing progress. Prudent monetary policies should be flexible and appropriate, and liquidity should be maintained at a reasonable and ample level, according to the annual Central Economic Work Conference.

Yi said that the monetary policies will be more forward-looking, effective and targeted, and the financial sector will offer greater support for the real economy. Credit growth will be stable, he added, noting that money supply and social financing expansion will basically match the nominal economic growth rate.

The central bank will guide financial institutions to ramp up support for the real economy, in particular small and micro firms, technological innovation and green development, Yi said. Inclusive small and microloans have benefited over 42 million small market entities this year.

As the average interest rate of corporate lending went below 5 percent this year, the lowest on record, the central bank will continue to improve the market-oriented interest rate formation and transmission mechanism and push for further drops in financing costs of businesses, Yi said.

Apart from support for the real economy, Yi said ensuring financial support for the country to achieve carbon peak and carbon neutrality is an important task of the central bank.

In November this year, the central bank launched two new special tools that offer low-cost financing for initiatives involving carbon reduction and cleaner and more efficient coal use. Yi said the central bank will grant financial institutions the first batch of funds by the end of this year.

These mechanisms will attach greater significance to the role of the market and encourage more social capital to flow into green and low-carbon areas, thus facilitating the orderly achievement of carbon-peak and carbon-neutrality goals, Yi said.

When asked about dissolving major risks and the development of the property sector, the central bank governor said the operation of China’s financial system is stable and the risks are largely controllable.

The rising trend of the macro leverage ratio has been effectively contained and some key risk points have been curbed, Yi said.


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