China’s Monetary Policy in 2026: A Moderately Loose Stance with Strategic Focus
In 2026, the People's Bank of China (PBOC) will maintain a moderately loose monetary policy, aimed at fostering stable economic growth and a measured recovery in prices. The central bank plans to utilize tools such as reserve requirement ratio cuts and interest rate adjustments to ensure ample liquidity, while guiding a balanced expansion in credit and overall financing.
A key objective is to align growth in money supply and aggregate financing with expected economic and inflation targets. Notably, financing channels outside traditional bank loans—especially bonds—already constitute over half of total social financing and are projected to grow at a faster pace in the coming year.
The PBOC will refine its structural monetary policy toolkit to enhance the quality of financial services for the real economy. Emphasis will be placed on:
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Boosting domestic demand, including consumption and effective investment.
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Advancing technological innovation and strengthening financial support for small and medium-sized enterprises.
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Promoting green transition, balanced regional development, and private sector growth.
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Further financial market liberalization is on the agenda. Efforts will focus on facilitating the use of the renminbi in trade and investment, improving related infrastructure, and optimizing mechanisms such as the Bond Connect and Swap Connect programs. More qualified overseas entities will be encouraged to issue panda bonds, while cross-border payment connectivity will be expanded.
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The central bank also highlighted the importance of containing financial risks in key sectors and establishing liquidity support mechanisms for non-bank institutions under specific circumstances. Additionally, measures will be taken to improve payment services for groups such as the elderly and foreign visitors, regulate virtual currency activities, and steadily advance the digital yuan initiative.
Overall, the 2026 monetary policy framework seeks to balance supportive liquidity conditions with targeted credit allocation, amid continued efforts to open China's financial system and safeguard its stability.
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