The People's Bank of China (PBOC) has announced a targeted expansion of its structural monetary policy toolkit, reinforcing support for green transition, technological upgrading, and innovation-driven growth as part of China's broader economic and social development strategy.

To accelerate the comprehensive green transition of the economy, the PBOC has expanded the scope of the Carbon Emission Reduction Facility (CERF) to include a wider range of projects with direct and measurable carbon-reduction effects. Newly eligible activities include energy-efficiency retrofits, green industrial upgrading, and the transition to low-carbon and renewable energy systems.

CERF operations are conducted quarterly, with each operation providing one-year central bank lending funds. The facility's annual ceiling remains capped at RMB 800 billion, while the actual quarterly volume is determined based on monetary policy conditions and macroeconomic needs. Funds are extended to financial institutions in line with their eligible green loan issuance, reinforcing the policy’s principle of “lending first, refinancing later.”

The expansion signals a shift from a narrower emissions-reduction focus toward supporting systemic decarbonization across production, infrastructure, and energy use, strengthening the role of green finance in China's medium- and long-term growth model.

In parallel, the PBOC announced a RMB 400 billion increase in the quota for its central bank lending facility supporting sci-tech innovation and technological upgrading, raising the total quota to RMB 1.2 trillion.

The adjustment aims to enhance implementation of the so-called “Two New” policies—namely large-scale equipment upgrading and consumer goods trade-in programs—while deepening support for technology-driven productivity gains. Beginning in 2026, the policy's coverage will be moderately expanded to include private small and medium-sized enterprises (SMEs) with high R&D intensity, addressing a long-standing financing gap for innovation-oriented private firms.

Together, the two measures underscore the PBOC's continued reliance on targeted, structural monetary tools rather than broad-based easing. By channeling central bank funding toward green transformation, advanced manufacturing, and innovation-led SMEs, policymakers aim to stabilize growth while accelerating structural upgrading, improving capital allocation efficiency, and aligning financial resources with national development priorities.