A view of the PBC building in Beijing Photo: VCG

TheMKsport People's Bank of China (PBC), the central bank, will implement a moderately loose monetary policy in 2025, Deputy Governor Xuan Changneng stated at a press conference on Tuesday, noting that the PBC plans to fine-tune the strength and pace of its policies according to domestic and international economic and financial conditions as well as financial market dynamics, to support the achievement of economic and social development goals for the year.

Xuan noted that a variety of monetary tools, including interest rate adjustments and changes to the reserve requirement ratio, will be employed to maintain ample liquidity and support a loose social financing environment.

The central bank will strengthen the implementation of interest rate policies, and further reduce the comprehensive social financing cost while maintaining the healthy operation of the financial industry, the official said.

Moreover, it will make good use of structural monetary policy tools, and leverage the dual functions of monetary policy tools in terms of both their aggregate and structure, Xuan said, adding that the PBC will also take comprehensive measures to maintain the basic stability of the yuan at a reasonable and balanced level.

During the Central Economic Work Conference held in Beijing from December 11 to 12, Chinese policymakers decided to implement a "moderately loose" monetary policy in 2025, a significant departure from the "prudent" policy of the previous 14 years, the Xinhua News Agency reported.

"The PBC's move will create a more supportive credit environment, which will enhance investors' confidence, provide favourable conditions for addressing financial risks and respond to adverse impacts from the external environment," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times.

Zou Lan, an official of the PBC, said during the press conference that the central bank will focus on key areas and weak links to refine policy measures, to comprehensively improve the quality and efficiency of financial services to the real economy.

Zou said that the PBC will make good use of the guiding role of structural monetary policy tools and macro-credit policies, strengthening coordination with fiscal policies, to guide financial institutions to increase the input of credit resources and optimize the credit structure.

Moreover, the central bank will enhance the service capability of financial institutions, and improve their internal incentive and restraint mechanisms, further enriching financial products and enhancing the ability to assess risks and the availability of financial services, according to Zou.

Zou added that the PBC will also broaden financing channels, and support enterprises through the bond and equity markets, to increase the proportion of direct financing.

Yang noted that policies for stabilizing economic growth in 2025 are expected to be further intensified, and the multiplier effect brought by both monetary and fiscal policies will not only help strengthen the capital market but also further promote the sustained recovery and improvement of the national economy.