By hannover-web.com In a recent interview, we explored the proactive measures that financial authorities are taking to ensure stable economic growth and high-quality development through impactful monetary policies.
The central government has rolled out significant initiatives, such as lowering the deposit reserve ratios and policy interest rates, guiding reductions in existing mortgage rates, and encouraging long-term capital to enter the market. These actions have clearly indicated strong financial support for economic stability and quality growth, contributing to a marked improvement in social sentiment and market confidence.
This year, China’s economy has mostly operated smoothly, although some new challenges have surfaced. During a Politburo meeting on September 26, officials underscored the importance of prioritizing key areas and ramping up proactive measures. Their focus is on effectively implementing existing policies while enhancing new ones to improve their precision and efficacy.
On September 27, the People’s Bank of China announced a reduction in the deposit reserve ratio for financial institutions by 0.5 percentage points, with the average weighted deposit reserve ratio now around 6.6%. Additionally, the central bank cut the seven-day reverse repurchase rate from 1.7% to 1.5%, a significant reduction of 20 basis points.
Dong Ximiao, chief researcher at Zhuhai, commented on China’s commitment to a supportive monetary policy, noting that intensified monetary regulation will create a favorable financial environment for stable growth and quality development. This marks the second reduction of the year, expected to unlock approximately 1 trillion yuan in long-term liquidity, while the interest rate cut is the largest seen in nearly four years.
Ye Yindan, a researcher at the Bank of China, described the timing and scale of these rate cuts as impactful. He stated that a lower reserve requirement will boost the banking system’s access to long-term, low-cost liquidity, enhancing banks’ capacity to support the real economy. With a market-oriented interest rate adjustment mechanism in place, this policy shift is likely to lower various benchmark interest rates, reduce financing costs for businesses, and stimulate domestic demand.
The implementation of these monetary policies delivers strong support for credit growth. A representative from the Ningbo branch of Bank of Communications noted that the recent reserve ratio reduction will further unleash long-term funds and optimize the bank’s funding structure. “Going forward, our focus is on serving the real economy and aligning business development with the financial needs of key sectors,” he added.
In addition, financial authorities have introduced five new policies targeting the real estate market to promote its stable and healthy development, addressing both supply and demand perspectives. On the demand side, the central bank is guiding commercial banks to align existing mortgage rates with those of new loans, which is expected to average a decrease of around 0.5 percentage points. The minimum down payment ratio for first-time and second home buyers has also been standardized at 15%, helping families meet their diverse housing needs.
Mr. Zhang, a resident of Qingdao, Shandong, expressed his enthusiasm for upgrading his housing situation. “The new policies on existing mortgage rate reductions and lower down payments are fantastic news for us,” he said, as he searches for a larger home closer to his child’s school.
As of the end of June, China’s personal housing loan balance stood at 37.79 trillion yuan. Reductions in existing mortgage rates are anticipated to alleviate the monthly payment burden for households, potentially benefiting 50 million families and 150 million individuals, with an average annual decrease in interest payments estimated at around 150 billion yuan.
Dong Ximiao remarked that lowering existing mortgage rates will relieve borrowers’ interest payments and repayment pressure, allowing them to allocate funds for other expenditures and possibly reducing early repayment instances.
Numerous supportive policies for the supply side have also been implemented. For example, the People’s Bank of China and the National Financial Supervision Administration have decided to extend temporary policies on commercial property loans until the end of 2026, which will aid in revitalizing the existing assets of real estate firms and improving their cash flow.
In April, an organized signing event for commercial property loans was held by the Shanghai headquarters of the People’s Bank and the Shanghai Regulatory Bureau, resulting in 146 billion yuan in loan agreements among eight major commercial banks and twelve real estate companies. The extension of commercial property loan policies is expected to continue supporting private real estate financing.
“These recent enhancements to real estate financial policies reinforce our ongoing commitment, ensuring a smooth transition between old and new regulations,” said Wen Bin, chief economist at China Minsheng Bank, who emphasized that this increase in financial support delivers a clear message of stability for the real estate market.
