The State Council Information Office held a press conference to introduce information on financial support for high-quality economic development.

Press conference scene (photographed by Zhao Yifan)

 

　　Shou Xiaoli, Director of the News Bureau and Spokesperson of the State Council Information Office:

 

　　Ladies and gentlemen, good morning! Welcome to the press conference hosted by the State Council Information Office. Today, we’re delighted to have with us Mr. Pan Gongsheng, Governor of the People’s Bank of China; Mr. Li Yunze, Director of the Financial Regulatory Administration; and Mr. Wu Qing, Chairman of the China Securities Regulatory Commission. They will brief you on financial measures supporting high-quality economic development and answer questions that you may have. Now, let’s begin with an introduction by Mr. Pan Gongsheng.

 

　　2024-09-24 09:00:58

 

Pan Gongsheng (photographed by Xu Xiang)

 

　　Pan Gongsheng, Governor of the People's Bank of China:

 

　　Thank you, Director Shou Xiaoli. Good morning,各位 journalists! I’m delighted to be meeting with all of you again. Thank you for your long-term attention and support of the reform and development of the financial sector as well as the People’s Bank of China’s various initiatives!

 

　　Since the beginning of this year, the People's Bank of China has adhered to the fundamental principle of financial services supporting the real economy, maintained a supportive monetary policy stance and orientation, and carried out three relatively significant monetary policy adjustments in February, May, and July.

 

　　On the aggregate level of monetary policy, we will comprehensively employ a variety of monetary policy tools—including lowering the reserve requirement ratio, reducing policy interest rates, and guiding downward movements in loan prime rates—to create a favorable monetary and financial environment.

 

　　In terms of the structure of monetary policy, we will focus on key links for high-quality development by establishing re-lending programs for technological innovation and technological upgrades, thereby intensifying financial support for technological innovation and equipment renewal and upgrading. We will also reduce the down payment ratio and interest rates for mortgage loans, lower the interest rates on housing provident fund loans, and launch re-lending programs for affordable housing, using market-oriented approaches to accelerate the destocking of existing commercial housing.

 

　　In terms of monetary policy transmission, we are promoting reforms to the quarterly value-added accounting method for the financial sector—shifting from the previous approach, which relied primarily on growth rates of deposits and loans, to an income-based accounting method. We are also rectifying and standardizing manual interest subsidies and circular fund flows, revitalizing existing underutilized financial resources, enhancing the efficiency of capital utilization, and improving the effectiveness of monetary policy transmission.

 

　　On the exchange rate front, we will uphold the decisive role of the market in exchange-rate formation, maintain exchange-rate flexibility, strengthen expectation guidance, and ensure that the RMB exchange rate remains broadly stable at a reasonable and balanced level.

 

　　The effectiveness of monetary policy continues to become evident: at the end of August, the scale of social financing grew by 8.1% year-on-year, and RMB loans increased by 8.5% year-on-year—about 4 percentage points higher than the nominal GDP growth rate. Moreover, financing costs remain at historically low levels.

 

　　In accordance with the central government’s strategic plans and arrangements, and to further support stable economic growth, the People’s Bank of China will firmly uphold its supportive monetary policy stance, intensify the力度 of monetary policy adjustments, enhance the precision of these adjustments, and create a favorable monetary and financial environment for stable economic growth and high-quality development.

 

　　2024-09-24 09:10:58

 

　　Pan Gongsheng:

 

　　With today’s press conference, I am announcing the following policies:

 

　　First, lower the reserve requirement ratio and policy interest rates, and thereby bring down market benchmark interest rates. Second, reduce the interest rates on existing home loans and standardize the minimum down payment ratio for mortgages. Third, introduce new monetary policy tools to support the stable development of the stock market.

 

　　First, we will lower the reserve requirement ratio and policy interest rates. Recently, the reserve requirement ratio will be cut by 0.5 percentage points, injecting approximately RMB 1 trillion in long-term liquidity into the financial market. Later this year, depending on the state of market liquidity, we may further reduce the reserve requirement ratio by another 0.25 to 0.5 percentage points at an opportune time. We will also lower the central bank’s policy interest rate—the interest rate on 7-day reverse repurchase operations—by 0.2 percentage points, from the current 1.7% to 1.5%. At the same time, we will guide both loan prime rates and deposit rates to decline in tandem, thereby maintaining the stability of commercial banks’ net interest margins.

 

　　Second, we will reduce the interest rates on existing home loans and unify the minimum down-payment ratio for mortgage loans. We will guide commercial banks to lower the interest rates on existing home loans to levels close to those of newly issued loans, with an estimated average reduction of around 0.5 percentage points. We will also unify the minimum down-payment ratios for first- and second-home mortgages, reducing the national minimum down-payment requirement for second-home loans from the current 25% to 15%. Furthermore, we will increase the central bank’s funding support ratio for the 300 billion yuan in reloans for affordable housing—established by the People’s Bank of China in May—from the original 60% to 100%, thereby strengthening market-based incentives for banks and acquisition entities. Finally, we will extend the expiration dates of two policy documents—the loans for commercial properties due by year-end and the “Financial 16 Articles”—to the end of 2026. Originally set to expire at the end of this year, these two documents have now been extended, together with the Financial Regulatory Administration, until the end of 2026.

 

　　Third, we will introduce new monetary policy tools to support the stable development of the stock market. The first measure is to establish a securities, fund, and insurance company swap facility, enabling eligible securities firms, funds, and insurance companies to obtain liquidity from the central bank by pledging their assets. This policy will significantly enhance institutions’ ability to access funding and increase their capacity to boost their equity holdings. The second measure is to launch a special relending program for stock buybacks and share increases, guiding banks to provide loans to listed companies and major shareholders to support their stock buyback and share-increase activities.

 

　　The policy measures introduced earlier will be released one by one—either as policy documents or as public announcements—on the website of the People's Bank of China in the near future.

 

　　Let me briefly introduce these first. Later, I’ll join Director Li Yunze and Chairman Wu Qing to answer the questions you’re all concerned about. Thank you!

 

　　2024-09-24 09:19:36

 

　　Shou Xiaoli:

 

　　Thank you, President Pan. Next, let’s welcome Director Li Yunze to give the introduction.

 

　　2024-09-24 09:24:56

 

Li Yunze (photographed by Xu Xiang)

 

　　Li Yunze, Director of the Financial Regulatory Administration:

 

　　Thank you, Director Shou Xiaoli. Good morning, everyone—media friends! It’s a great pleasure to meet with you all today. First of all, on behalf of the National Financial Regulatory Administration, I’d like to extend our heartfelt gratitude to all of you media friends for your long-term support and assistance in our financial regulatory work.

 

　　Since the beginning of this year, the National Administration of Financial Regulation has firmly implemented the major decisions and deployments of the Party Central Committee and the State Council, taken proactive measures, and tackled challenges head-on. It has coordinated and promoted the three key tasks—preventing risks, strengthening regulation, and fostering development—and has made solid progress in all aspects of its work.

 

　　In terms of risk prevention, we are focusing on key areas and steadily advancing risk-resolution efforts, striving to create a safe and stable financial environment conducive to economic development. In accordance with the arrangements made at the Central Financial Work Conference, we are actively promoting reforms and risk resolutions for small- and medium-sized financial institutions, and firmly preventing the spillover and transmission of risks. Currently, regions where high-risk institutions are concentrated have already formulated specific reform and risk-resolution plans, which are being implemented in a prudent and orderly manner under a “one province, one policy” approach. At the same time, we are also guiding banking and insurance institutions to actively cooperate in addressing risks related to real estate and local government debt. At present, China’s financial sector—especially large financial institutions—is operating soundly and its risks remain under control. As the three major risks—real estate, local government debt, and risks associated with small- and medium-sized financial institutions—are gradually resolved and mitigated, financial risks are steadily receding. We will resolutely uphold the bottom line of preventing systemic financial risks from occurring.

 

　　In terms of stringent regulation, we adhere to a comprehensive approach that addresses both the symptoms and root causes. We tackle difficult issues through reform and promote standardization via institutional mechanisms, continuously enhancing the industry’s capacity for sustainable development. We guide the banking and insurance sectors to return to their core missions and focus on their primary businesses, thereby achieving differentiated development and complementary strengths. We are promoting the issuance of the new “Ten Measures” for the insurance industry, promptly refining regulations on asset management, continuously strengthening governance in non-bank financial institutions, optimizing and solidifying basic credit management practices, and driving solutions to deep-seated issues that have been hindering the industry’s sustained and healthy development. We encourage financial institutions to optimize their strategic layouts, hone their internal capabilities, and proactively address risks arising from narrowing net interest margins and declining interest rate spreads. We focus on effectively controlling substantive risks, earnestly implementing the due diligence exemption system, and at the same time, rigorously investigating and punishing serious violations of laws and regulations, thus fostering a fair and just market order.

 

　　In terms of promoting development, we are focusing on removing bottlenecks and addressing key sticking points, enhancing the alignment between the economy and finance, and stepping up financial services for priority sectors and weak links. We are strengthening financing support for the “Two Priorities” and “Two New” initiatives, and vigorously supporting the development of new-quality productivity tailored to local conditions. As of the end of August this year, loans to high-tech industries and medium- and long-term manufacturing loans increased by 13.2% and 15.9%, respectively, year-on-year. We are also encouraging an increase in and broader coverage of micro and small enterprise loans, and providing equal support to private enterprises without discrimination. Loans to inclusive micro and small enterprises and loans to private enterprises grew by 16.1% and 9.1%, respectively, year-on-year. We have guided insurance institutions to do their utmost in handling claims for major accidents as well as natural disasters such as heavy rainfall and typhoons, helping affected people and business entities overcome their difficulties. In the first eight months of this year, the insurance industry has paid out a total of 1.55 trillion yuan in claims, representing a year-on-year increase of 26.1%.

 

　　Next, the Financial Regulatory Administration will actively strengthen communication and exchanges with the market and our media friends, promptly addressing public concerns. Just now, President Pan provided a briefing and introduction on the relevant policy adjustments. As for further optimizing and refining regulatory policies, I’ll be happy to share more specific details with you during the Q&A session. We are committed to fostering a regulatory environment that is stable, transparent, and predictable. We’ll keep up our efforts with even greater intensity, continuously enhancing the quality and effectiveness of our services to the real economy and contributing more financial strength to high-quality development. Thank you.

 

　　2024-09-24 09:39:56

 

　　Shou Xiaoli:

 

　　Thank you, Director Li, for your introduction. Next, please welcome Chairman Wu Qing to give his presentation.

 

　　2024-09-24 09:40:15

 

Wu Qing (photographed by Xu Xiang)

 

　　Chairman of the China Securities Regulatory Commission, Wu Qing:

 

　　Ladies and gentlemen, media friends, good morning to all of you. First of all, I’d like to extend my heartfelt gratitude for your long-term attention and support of the capital market, as well as for your ongoing concern and backing of the work of the China Securities Regulatory Commission. To implement the spirit of the Central Financial Work Conference, in April of this year, the State Council issued the new “Nine Measures.” We have taken these measures seriously and worked closely with relevant parties to develop several supporting documents. Moreover, we’ve formulated or revised over 50 institutional rules and regulations, which, together with the new “Nine Measures,” have created a comprehensive “1+N” policy and regulatory framework. A number of key initiatives are now being put into practice, and we’ve achieved some initial results in strengthening regulation of the capital market, preventing risks, and promoting high-quality development.

 

　　First, the market ecosystem has continued to improve. We have remained firm in enforcing regulations that are “sharp and effective,” with clear boundaries and no loopholes. The General Office of the State Council has forwarded the opinions issued by the CSRC and four other departments on further strengthening comprehensive measures to prevent and punish financial fraud in the capital market. As of the end of August, a total of 577 cases involving violations of securities and futures laws had been investigated and prosecuted. In particular, several high-profile cases—including those involving Evergrande Real Estate and CNNC Titanium Dioxide—were rigorously investigated and dealt with. Moreover, the Ministry of Finance has imposed strict penalties on PwC, Evergrande Real Estate’s auditing firm, sending a powerful deterrent message.

 

　　Second, the foundational institutional framework of the market is being accelerated. We are optimizing regulatory rules across various stages, including issuance and listing, dividend distribution, share reduction, and trading. In 2023, listed companies distributed dividends totaling 2.2 trillion yuan, reaching a new historical high. We have strengthened regulation of algorithmic trading, further tightening the regulatory rules for such activities and suspending the securities lending business. We are also deepening reforms of public fund fee structures and encouraging industry institutions to prioritize functional development.

 

　　Third, market functions continued to operate effectively. Despite numerous challenges, we maintained an appropriate pace for IPOs and refinancing activities. We kept steadily improving the quality and efficiency of the filing and regulatory processes for overseas listings. The bond and futures markets continued to play their roles in a steady and orderly manner. In the first eight months, the exchange bond market issued bonds of various types totaling 8.9 trillion yuan, maintaining steady growth.

 

　　Fourth, we are firmly advancing reform and innovation in the capital market. In alignment with the “five major initiatives” for financial development, we have issued and implemented a series of policy measures, including the “16 Measures for Capital Market Services to Tech Enterprises” and the “Eight Measures for the STAR Market,” and are actively supporting venture capital development. We are also enhancing the role of mergers and acquisitions and restructuring; since May of this year, nearly 50 major restructuring deals have been disclosed across the market, receiving a generally positive response.

 

　　The Third Plenary Session of the 20th Central Committee of the Party has laid out a strategic plan for further comprehensively deepening reform of the capital market. The China Securities Regulatory Commission (CSRC) will remain committed to strengthening fundamentals and laying solid foundations, enforcing strict supervision and regulation, and using reform as a driving force for development and stability. We will continue to enhance the capital market’s ability to coordinate investment and financing, thereby better serving China’s modernization drive. We will focus on “three key priorities”: First, we will emphasize enhancing the intrinsic stability of the capital market. We will establish a clear orientation toward rewarding investors, improving the quality and investment value of listed companies, and accelerating reforms on the investment side to promote the establishment of a policy framework that encourages long-term, patient investment. We will issue guiding opinions on encouraging medium- and long-term funds to enter the market. We will also further refine our policy toolkit and firmly safeguard the risk bottom line. Second, we will emphasize supporting the recovery and improvement of the real economy and fostering high-quality economic development. We will focus on key areas such as new-quality productive forces, making good use of various capital market instruments—including stocks, bonds, and futures—and adopting multiple measures to invigorate the mergers and acquisitions (M&A) and restructuring market. We will also release six measures aimed at promoting M&A and restructuring activities. At the same time, we will work closely with all relevant parties to ensure smooth circulation across all stages of private equity and venture capital funds—from fundraising and investment to management and exit. Third, we will emphasize protecting the legitimate rights and interests of small and medium-sized investors. We will resolutely crack down on illegal and non-compliant behaviors such as financial fraud and market manipulation, while striving to achieve more landmark cases in areas like representative litigation and advance compensation.

 

　　I’ll briefly introduce these to everyone now, and we’ll continue our discussion later. Thank you.

 

　　2024-09-24 09:40:33

 

Shou Xiaoli invites reporters to ask questions (photographed by Luan Haijun).

 

　　Shou Xiaoli:

 

　　Thank you, Chairman Wu. Now we’ll move on to the question-and-answer session. Before asking your question, please state the name of your news organization. You may now begin asking your questions.

 

　　2024-09-24 09:41:00

 

A reporter from CCTV, China Media Group, asks a question (photographed by Zhao Yifan).

 

　　CCTV reporter from China Media Group:

 

　　We’re aware that, since the beginning of this year, the People’s Bank of China has already implemented three relatively significant adjustments to its monetary policy. As Governor Pan just mentioned, the next step will be to further lower the reserve requirement ratio and policy interest rates. These aggregate-policy measures will play a crucial role in stabilizing economic growth, which is why everyone is paying close attention to them. Could you please provide us with a more detailed explanation? Thank you.

 

　　2024-09-24 09:50:22

 

　　Pan Gongsheng:

 

　　The overall stance of monetary policy is a topic of great concern for both society at large and the market. As I have emphasized on numerous occasions in various settings, the People's Bank of China remains committed to a supportive monetary policy stance, intensifying the力度 of monetary policy adjustments and enhancing their precision. We have employed a combination of diverse monetary policy tools to underpin the steady growth of the real economy. In designing adjustments to our monetary policy tools, the People's Bank of China takes into account several key factors: The first factor is to support the stable growth of China’s economy; the second factor—also crucial in our design of monetary policy tools—is the price level, and we aim to promote a moderate recovery in prices; the third factor involves striking a good balance between supporting the growth of the real economy and ensuring the soundness of the banking sector itself; and the fourth factor concerns the exchange rate, which we seek to keep broadly stable at a reasonable and balanced level. Additionally, we place great emphasis on the coordinated synergy between monetary policy and fiscal policy, thereby enabling proactive fiscal policies to exert their full effectiveness more efficiently.

 

　　In my opening remarks, I mentioned several specific macroeconomic policies and adjustments to the money supply. Now, let me provide more detailed information on these.

 

　　First, regarding the reduction in the reserve requirement ratio. In February of this year, we lowered the reserve requirement ratio by 0.5 percentage points. This time, we plan to cut the reserve requirement ratio again by another 0.5 percentage points, which could inject approximately RMB 1 trillion in long-term liquidity into the financial markets. Currently, the weighted average reserve requirement ratio for financial institutions stands at 7%. Among them, large banks currently have a ratio of 8.5%; after this adjustment, their ratio will drop from 8.5% to 8%. Medium-sized banks now have a ratio of 6.5%; following this adjustment, their ratio will fall from 6.5% to 6%. Rural financial institutions have already been implementing a reserve requirement ratio of 5% for several years, so they will not be subject to further adjustments this time. After the implementation of the reserve requirement ratio cut, the average reserve requirement ratio for the banking sector will be around 6.6%. Compared with central banks in major global economies, this level still leaves some room for further adjustment. Given that there are three months remaining until the end of the year, we will continue to monitor the situation and may consider making an additional reduction of 0.25 to 0.5 percentage points, if necessary.

 

　　Second, regarding the reduction in policy interest rates: Currently, the 7-day reverse repurchase rate in the open market serves as the central bank’s primary policy interest rate. In July, we lowered the 7-day reverse repurchase rate from 1.8% to 1.7%. This time, we’ve further reduced it by 20 basis points—from 1.7% to 1.5%. Under a market-oriented interest-rate adjustment mechanism, adjustments to the policy interest rate will inevitably trigger corresponding adjustments in various market benchmark interest rates. Following this policy rate adjustment, we anticipate that the Medium-term Lending Facility (MLF) rate will also be lowered by approximately 0.3 percentage points. Moreover, we expect the Loan Prime Rate (LPR) and deposit rates to decline by 0.2 to 0.25 percentage points accordingly.

 

　　This interest-rate adjustment is expected to have an overall neutral impact on banks’ net interest margins. While lowering the interest rates on existing mortgages will reduce banks’ interest income, it will also help curb customers’ early repayments. The central bank’s reduction in the reserve requirement ratio effectively provides banks with low-cost, long-term funding directly. Meanwhile, the Medium-term Lending Facility and open-market operations remain the primary channels through which the central bank supplies medium- and short-term funds to commercial banks; the decline in interest rates will also lower banks’ funding costs. Moreover, as I just mentioned, we anticipate that both loan prime rates and deposit rates will fall symmetrically. The cumulative effect of the previous rounds of deposit-rate reductions—driven by our self-regulatory mechanism aimed at guiding deposit rates downward—is set to become increasingly evident over time. Since deposit-rate repricing occurs more slowly than loan-rate repricing, the cumulative impact of earlier efforts to lower deposit rates will gradually materialize as time goes on. Therefore, in designing this policy adjustment, the People’s Bank of China’s technical team conducted multiple rounds of rigorous quantitative analysis and assessment, concluding that the impact of this interest-rate adjustment on banks’ revenues will be neutral, meaning banks’ net interest margins are expected to remain broadly stable. Thank you!

 

　　2024-09-24 09:55:08

 

A reporter from China Securities Journal asks a question (photographed by Zhao Yifan)

 

　　Reporter from China Securities Journal:

 

　　The Third Plenary Session of the 20th CPC Central Committee proposed strengthening the functions of the capital market by coordinating investment and financing, and supporting the entry of long-term funds into the market. Relevant authorities have also been consistently calling for and promoting long-term and value-oriented investments. Could you please explain how we can further enhance the entry of medium- and long-term funds into the market and promote a balance between investment and financing?

 

　　2024-09-24 10:04:02

 

　　Wu Qing:

 

　　Let me address this question. Long-term capital is indeed extremely important. Medium- and long-term funds are characterized by a high degree of professional management and strong stability, making them crucial for weathering short-term market fluctuations and playing a vital role as “stabilizers” and “ballast stones” in the capital market. In recent years, the China Securities Regulatory Commission has vigorously promoted the development of equity-oriented public mutual funds and, together with relevant parties, has continuously encouraged medium- and long-term funds to enter the market, achieving some phased results. As of the end of August this year, the combined holdings of equity-oriented public mutual funds, insurance funds, various pension funds, and other professional institutional investors approached 15 trillion yuan in A-share free-float market capitalization—more than doubling since the beginning of 2019. The proportion of these institutions’ holdings relative to A-share free-float market capitalization rose from 17% to 22.2%. Among them, the National Council for Social Security Fund stands out particularly. Since its establishment, the National Council for Social Security Fund has achieved an average annualized return of over 10% from its investments in the domestic stock market, setting a benchmark for long-term and value-oriented investing in the A-share market.

 

　　At the same time, we also see that in the current capital market, issues such as an insufficient overall volume of medium- and long-term funds, an unfavorable structural composition, and inadequate leveraging of their guiding role remain prominent. The institutional environment for “long-term capital investing for the long term” has yet to be fully established. To implement the spirit of the Third Plenary Session of the 20th CPC Central Committee and further address the bottlenecks and pain points hindering medium- and long-term funds from entering the market, with strong support from relevant ministries and commissions, the China Securities Regulatory Commission and other related departments have recently formulated the "Guiding Opinions on Promoting the Entry of Medium- and Long-Term Funds into the Market," which will be issued shortly. These opinions include a series of measures aimed at supporting the entry of medium- and long-term funds into the market, and we believe that the institutional environment will continue to improve. Overall, the focus is on achieving the goal of "more long-term capital, longer investment horizons, and better returns," thereby further facilitating the entry of medium- and long-term funds into the market. The forthcoming "Guiding Opinions" highlight three key initiatives:

 

　　First, we will vigorously develop equity-oriented public mutual funds. The key focus here is to urge fund companies to further refine their business philosophies, remain firmly investor-return oriented, and make concerted efforts to enhance their investment research and service capabilities. We will also strive to launch more products that meet the needs of ordinary investors and work hard to deliver long-term returns for them. Recently, as you may have noticed, ten new CSI A500 ETFs were launched and have been extremely well-received by the market, quickly reaching their fundraising caps. Moving forward, we will continue to streamline the registration process for equity-oriented fund products, vigorously promote innovation in broad-based ETFs and other index-linked products, and, at an appropriate time, introduce more small- and mid-cap ETFs—including those tracking the ChiNext Index and the STAR Market—so as to better serve investors and better support national strategies and the development of new-quality productivity. In addition, we will encourage the public fund industry to steadily reduce its overall fee rates—a topic that has recently drawn considerable attention. We’ve already taken two steps in this direction, and there’s one more step remaining. By steadily lowering these comprehensive fees, we can better benefit and reward our investors.

 

　　Second, we need to improve the institutional environment for “long-term capital and long-term investment.” The key is to enhance regulatory inclusiveness toward equity investments by medium- and long-term funds and fully implement multi-year performance assessments spanning more than three years. We must remove institutional barriers that hinder insurance funds from making long-term investments, encouraging insurance institutions to become steadfast value investors and providing stable, long-term capital to the capital market. At the same time, we should foster positive interactions between a multi-tiered, multi-pillar pension system and the capital market, refine the investment policies and systems for the National Council for Social Security Fund and basic pension insurance funds, and encourage enterprise annuity funds to explore diversified investment strategies tailored to the different ages and risk preferences of their beneficiaries.

 

　　Third, we will continue to improve the capital market ecosystem. The focus will be on adopting a variety of measures to enhance the quality and investment value of listed companies, refining supporting institutional arrangements for the participation of institutional investors in corporate governance, and at the same time, cracking down rigorously on all types of illegal and non-compliant activities, thereby fostering a healthy market environment that encourages medium- and long-term funds to “want to come in, stay put, and thrive.”

 

　　Next, we will work closely with all relevant ministries and departments as well as related organizations to step up our efforts and ensure that all measures are effectively implemented and put into practice. Thank you.

 

　　2024-09-24 10:04:32

 

A reporter from the 21st Century Business Herald asks a question (photographed by Zhao Yifan).

 

　　Reporter from 21st Century Business Herald:

 

　　Large commercial banks play a pivotal role in the financial system, yet their influence often goes unnoticed. Could you please tell us what measures the financial regulatory authorities will take in the near future to promote the sound and stable operations of these large banks? In June of this year, the State Council issued the “Several Policy Measures for Promoting High-Quality Development of Venture Capital,” which proposed expanding the scope of the pilot program for equity investments by financial asset investment companies established under large banks. What specific implementation measures have been taken in response to this initiative?

 

　　2024-09-24 10:04:58

 

　　Li Yunze:

 

　　Thank you for your question; I’d like to address it now. Indeed, as you just mentioned, large commercial banks are the mainstay of China’s financial system in serving the real economy and also serve as a crucial stabilizer for maintaining financial stability. Currently, these large commercial banks are operating steadily, with sound asset quality and key regulatory indicators all within “healthy ranges.” As we all know, capital is the “lifeblood” of financial institutions—it forms the foundation for enhancing their ability to serve the real economy and acts as a buffer against risks. In recent years, large commercial banks have primarily relied on retaining their own profits to boost capital levels. However, as banks have stepped up efforts to reduce fees and offer concessions, net interest margins have narrowed somewhat, and profit growth has gradually slowed down. Therefore, it’s necessary to coordinate multiple channels—both internal and external—to replenish capital effectively. To further consolidate and enhance the stable operational capabilities of large commercial banks and enable them to better play their role as the mainstay in serving the real economy, after careful deliberation, the state plans to increase the core Tier 1 capital of six major commercial banks. This will be implemented in an orderly manner following the guiding principles of “overall coordination, phased implementation, and tailored strategies for each bank.” We will also continue to urge large commercial banks to improve their refined management practices and strengthen their capacity for high-quality development under enhanced capital constraints.

 

　　Currently, in China’s total social financing, indirect financing still dominates. This underscores the need for us to forge a path of financial development—particularly in science and technology finance and innovation-driven investment—that is uniquely Chinese in character. In the earlier stages, financial asset investment companies established by major commercial banks have already launched pilot equity investment programs in Shanghai, paving the way, accumulating valuable experience, and building up a skilled workforce. They are now well-positioned to expand the pilot program. According to relevant directives from the State Council, and to effectively leverage the pilot program’s leading and driving role and encourage the development of venture capital, we plan to adopt the following three measures: First, we will expand the scope of pilot cities. Together with relevant departments, we will study extending the pilot program from its original base in Shanghai to 18 other large and medium-sized cities that are particularly active in technological innovation, including Beijing. Second, we will relax restrictions. We will appropriately ease limits on the amount and proportion of equity investments, raising the share of on-balance-sheet investments from the original 4% to 10%, and increasing the proportion of investment in a single private equity fund from the original 20% to 30%. Third, we will optimize performance evaluation. We will guide relevant institutions to implement the requirement of due diligence exemption from liability and establish sound, long-term, and differentiated performance assessment systems. Moving forward, we will promptly summarize our experiences and continue studying ways to further expand the scope of pilot cities. At the same time, we will keep refining supporting policies and actively promote the swift implementation of more projects.

 

　　That’s all I’ll say for now. Thank you, everyone.

 

　　2024-09-24 10:05:24

 

 

Reuters reporter asks a question (photo by Zhao Yifan)

 

　　Reuters reporter:

 

　　Despite the Chinese government’s introduction of numerous policies aimed at attracting homebuyers and easing the loan burdens on homeowners, housing prices in China continue to decline, with some cities experiencing double-digit declines in total home prices. I’d like to ask: Do China’s financial regulators believe that the time has come for monetary policy measures to be introduced? Thank you.

 

　　2024-09-24 10:20:03

 

　　Pan Gongsheng:

 

　　Thank you for your question. This is an excellent question and one that has drawn widespread public attention. From our perspective, guided by our responsibilities, we are supporting the resolution of risks in the real estate market and its healthy development from a financial standpoint. Over the past several years, the People’s Bank of China has continuously refined its macroprudential policies for real estate finance, adopting comprehensive measures on both the supply and demand sides. We have repeatedly lowered the minimum down payment ratio for personal housing loans, reduced loan interest rates, eliminated the lower limit on interest rate policies, and introduced a series of policies—including establishing re-lending programs for affordable housing to support the acquisition of existing commercial residential properties. To implement the central government’s decisions and arrangements for promoting the stable and healthy development of the real estate market, the People’s Bank of China, together with the Financial Regulatory Administration, has recently issued five new real estate finance policies.

 

　　The first policy involves guiding banks to lower interest rates on existing home loans. Last August, the People’s Bank of China encouraged commercial banks to systematically reduce interest rates on outstanding home loans, and the results have been quite positive. On May 17 this year, after the nationwide floor for mortgage interest rates was lifted, previously, mortgage rates were set by adding or subtracting basis points from the Loan Prime Rate (LPR). There had been a national floor rate, but with the new mortgage policy introduced on May 17, we abolished this floor. As a result, the spread between the interest rates on newly issued loans and those on existing loans has widened significantly, particularly in major cities such as Beijing, Shanghai, Shenzhen, and Guangzhou, where the initial add-on margins were relatively high. Following that adjustment, the interest-rate gap between newly issued mortgages and existing ones has become even wider. To address this situation, the People’s Bank of China plans to guide banks in making bulk adjustments to the interest rates on existing home loans, bringing them down to levels close to those of newly issued loans. We estimate that, on average, these reductions will amount to about 0.5 percentage points. The figure is an average because the interest rates on existing loans vary depending on when they were originated, the specific region, and the particular bank issuing them. Thus, our projected reduction represents an expected average across all cases. By lowering interest rates on existing home loans, banks will help further reduce borrowers’ mortgage interest expenses. We estimate that this policy will benefit 50 million households—about 150 million people—and will cut household interest expenditures by roughly 150 billion yuan annually on average. This measure will help boost consumption and investment, discourage early loan repayments, and narrow the scope for illegal refinancing of existing mortgages. It will also protect the legitimate rights and interests of financial consumers and promote the stable and healthy development of the real estate market.

 

　　We will officially release this document soon. Given the large number of borrowers involved, banks will also need some time to make the necessary technical preparations. It’s likely that banks won’t be able to process your request immediately, so please don’t rush to the bank this afternoon. As for the next step, we’re also considering guiding commercial banks to refine their mortgage loan pricing mechanisms, allowing banks and customers to independently negotiate and dynamically adjust rates based on market-oriented principles.

 

　　The second policy is to unify the minimum down payment ratio for mortgage loans at 15%. To better support both urban and rural residents’ needs for primary housing purchases as well as diversified improvements in housing, commercial personal housing loans at the national level will no longer differentiate between first-home and second-home purchases. The minimum down payment ratio will be uniformly set at 15%. As of May 17, the minimum down payment for first homes was already 15%, while for second homes it was 25%. Now, both first and second homes will have a uniform minimum down payment ratio of 15%. Here, I’d like to clarify two points: First, local governments can adopt city-specific policies and independently decide whether to implement differentiated arrangements, as well as set the lower limit for the minimum down payment ratio within their jurisdictions. Given the vast size of the country and the significant differences in real estate market conditions among different cities and regions, local governments are empowered to adopt differentiated measures and determine the lower limit for the minimum down payment ratio within their jurisdiction based on the national floor. Second, commercial banks will negotiate with individual customers—taking into account the customers’ risk profiles and preferences—to determine the specific down payment ratio. Since 15% is merely the minimum down payment ratio, commercial banks may set higher ratios based on their assessment of the customer’s risk profile. On the other hand, some customers may choose to pay a higher down payment—say, 30%—if they have sufficient financial resources. This reflects a market-driven negotiation process between commercial banks and individual borrowers.

 

　　The third policy involves extending the validity periods of two real estate financial policy documents. Previously, the People's Bank of China and the Financial Regulatory Administration issued two policies—the “Financial 16 Articles” and loans for commercial properties—which have played a positive role in promoting the steady and healthy development of the real estate market and mitigating risks in the real estate sector. Specifically, the temporary policies concerning the extension of existing financing for property developers and loans for commercial properties were originally set to expire on December 31, 2024. This time, in consultation with the Financial Regulatory Administration, we have decided to extend both of these policies from December 31, 2024, to December 31, 2026.

 

　　The fourth policy is to optimize the refinancing policy for affordable housing. On May 17, the People's Bank of China announced the establishment of a 300-billion-yuan refinancing facility for affordable housing, guiding financial institutions to support local state-owned enterprises—on the basis of market-oriented and rule-of-law principles—in acquiring completed but unsold commercial residential properties at reasonable prices for use as either sale-based or rental-based affordable housing. This represents an important step in destocking the real estate market. To further enhance market-based incentives for banks and acquisition entities, we are increasing the proportion of funding provided by the People's Bank of China under the affordable housing refinancing policy from the original 60% to 100%. Previously, when commercial banks lent out 10 billion yuan, the People's Bank of China would provide 6 billion yuan; now, with commercial banks lending out 10 billion yuan, the People's Bank of China will provide 10 billion yuan in low-cost funds, thereby accelerating the process of destocking commercial residential properties.

 

　　The fifth policy is to support the acquisition of existing land holdings by property developers. Building on the practice of using a portion of local government special bonds for land reserves, we are exploring the possibility of allowing policy banks and commercial banks to provide loans—subject to certain conditions—to help market-oriented enterprises acquire land from property developers, thereby activating existing land resources and alleviating financial pressures faced by property developers. When necessary, the People's Bank of China could also provide refinancing support. We are currently working with the Financial Regulatory Administration to further study this policy.

 

　　Thank you!

 

　　2024-09-24 10:25:07

 

A reporter from Beijing Youth Daily asks a question (photographed by Zhao Yifan)

 

　　Beijing Youth Daily reporter:

 

　　Regarding small and micro enterprises, we’ve noticed that the government has recently introduced a number of supportive policies aimed at boosting financing for these businesses, and financial institutions have stepped up their efforts to provide services. As a result, financing for small and micro enterprises is showing a trend of increased volume, broader coverage, and stable pricing. At the same time, however, some small and micro enterprises have reported that they still face certain bottlenecks and sticking points. I’d like to know whether the Financial Regulatory Administration has any targeted measures in this regard. Thank you.

 

　　2024-09-24 10:33:10

 

　　Li Yunze:

 

　　Thank you for your question. Small and micro enterprises connect with thousands of households and play a vital role in stabilizing the economy, promoting employment, and improving people’s livelihoods. In recent years, together with the People’s Bank of China, we have continuously strengthened policy guidance, coordinated efforts across multiple parties, and improved financing services for small and micro enterprises. As of the end of August this year, the outstanding balance of inclusive loans to small and micro enterprises nationwide reached 31.9 trillion yuan—a fourfold increase compared to the end of 2017—and the average interest rate has cumulatively dropped by 3.5 percentage points. To further remove bottlenecks and obstacles in financing for small, medium, and micro enterprises, the Administration will focus on taking measures from two key areas:

 

　　First, we will work together with the National Development and Reform Commission to establish a coordination mechanism to support financing for small and micro enterprises. This mechanism draws on the experience gained from the earlier real estate financing coordination mechanism. At the district and county levels, we will set up dedicated task forces that will take a two-pronged approach: On one hand, they will reach out directly to enterprises, conducting large-scale visits to thousands of businesses and households to gain a deep understanding of their operational conditions and actual challenges—especially by thoroughly identifying the financing needs of small and micro enterprises. On the other hand, they will liaise closely with banks, recommending to banking institutions those small and micro enterprises that operate legally and in compliance, have genuine financing needs, and enjoy good credit standing. Banking institutions will promptly respond and, in principle, complete credit approval within one month, ensuring that credit funds are directly delivered to small and micro enterprises and truly bridging the “last mile” to benefit businesses and the people.

 

　　Second, we will optimize the policy on loan renewals without principal repayment. In 2014, the former China Banking Regulatory Commission issued a policy on loan renewals for small and micro enterprises—commonly known as “Document No. 36”—which clearly stipulated that small and micro enterprises meeting certain conditions could apply for loan renewals if they still had financing needs after their loans matured. In other words, upon maturity of their loans, these enterprises could continue obtaining financing without having to repay the principal. This type of lending is also referred to as “loan renewal without principal repayment.” It should be noted that this policy has been widely welcomed by small and micro enterprises and has played a positive role in promoting their access to financing. We will further optimize the loan renewal policy from three key aspects.

 

　　First, the eligible borrowers for loan extensions have been expanded from the original group of small and micro enterprises to all small and micro enterprises. Any small or micro enterprise that has a genuine financing need upon loan maturity but is facing funding difficulties—and meets the relevant eligibility criteria—can apply for continued loan support.

 

　　Second, the loan-extension policy will be temporarily expanded to include medium-sized enterprises for a period of three years. Specifically, working-capital loans to medium-sized enterprises due before September 30, 2027, will all be eligible to benefit from the same loan-extension policies applicable to small and micro enterprises.

 

　　Third, we will adjust the risk classification criteria to allow loans to enterprises that operate in compliance with the law, maintain ongoing operations, and have good credit standing to be renewed without having their risk classification downgraded solely on account of the renewal.

 

　　To ensure that the relevant support policies for credit to small, medium, and micro enterprises are truly implemented effectively—especially to address the concerns of frontline credit officers when conducting credit approval for these enterprises—the General Administration recently issued a普惠 (inclusive) credit due-diligence exemption system. This system provides detailed guidelines on the circumstances under which due-diligence exemptions apply, thereby fully mobilizing the enthusiasm and initiative of frontline staff and striving to establish a long-term mechanism that encourages banks to dare to lend, be willing to lend, have the capacity to lend, and know how to lend.

 

　　That’s all I’ll answer for now. Thank you.

 

　　2024-09-24 10:33:30

 

A reporter from First Finance asks a question (photographed by Zhao Yifan)

 

　　First Finance reporter:

 

　　Earlier this year, we saw the establishment of a new coordination mechanism for real estate financing in newly developed cities. I’d like to learn about the latest developments and achievements so far. What further work and new initiatives are we considering for the next phase? Thank you.

 

　　2024-09-24 10:33:57

 

　　Li Yunze:

 

　　Thank you for your question. Just now, President Pan already provided a relatively systematic and comprehensive response regarding this year’s financial policies related to the real estate sector. After all, the stable and healthy development of the real estate market is crucial to the overall economic and financial situation as well as to the immediate interests of the people. In recent years, China’s real estate market has experienced significant changes in supply and demand. The continued slowdown in sales has put pressure on property developers’ liquidity, making it difficult for some completed but unsold projects to be delivered on schedule. To address this issue, the General Administration, together with the Ministry of Housing and Urban-Rural Development, has established a coordination mechanism for urban real estate financing. The most distinctive feature of this mechanism is that it “takes cities as the main body and projects as the center,” clearly separating the risks associated with property developer groups from the construction of individual real estate projects. It fully leverages the coordinating and integrating role of local governments, placing compliant, completed, and sold projects onto a “whitelist.” This mechanism guides financial institutions to meet the reasonable financing needs of real estate projects, promotes the completion and delivery of these projects, and effectively safeguards the legitimate rights and interests of homebuyers.

 

　　Thanks to the joint efforts of all parties, the urban coordination mechanism has achieved remarkable results. As of now, commercial banks have approved over 5,700 “whitelist” projects, with approved financing totaling 1.43 trillion yuan, supporting the timely delivery of more than 4 million housing units. Driven by this coordination mechanism, financial institutions have been steadily increasing their support for the real estate sector. As of the end of August, our real estate development loans for this year have turned positive compared to the beginning of the year, reversing the previous downward trend in such loans. M&A loans for real estate and housing rental loans have also grown by 14% and 18%, respectively, providing strong financial support for promoting the stable and healthy development of the real estate market.

 

　　Meanwhile, to actively support both rigid and improvement-based housing demands—as Governor Pan just mentioned—we will work together with the People's Bank of China to guide local governments and financial institutions in tailoring real estate financial policies to suit the specific conditions of each city. Going forward, we will also closely coordinate with the People's Bank of China to proactively and steadily reduce interest rates on existing home loans, thereby further lowering residents’ mortgage payments and enhancing their sense of gain and well-being.

 

　　Next, we will resolutely implement the Party Central Committee and the State Council’s decisions and plans on real estate work, further promote the effective implementation of the coordinated financing mechanism for urban real estate, and ensure that we “include all eligible projects,” “provide loans to all eligible applicants,” and “release all approved funds.” We will firmly win the tough battle to ensure timely delivery of housing projects and promote the steady and healthy development of the real estate market.

 

　　Thank you, everyone.

 

　　2024-09-24 10:34:21

 

A question from a Red Star News reporter (photographed by Zhao Yifan)

 

　　Red Star News reporter:

 

　　The current market is paying close attention to mergers and acquisitions (M&A) and restructuring activities among listed companies. You just mentioned that we need to adopt a variety of measures to invigorate the M&A and restructuring market. In recent years, regulatory authorities have been steadily advancing market-oriented reforms in M&A and restructuring. Could you please tell us what specific measures the CSRC plans to take next to further enhance the efficiency and vitality of M&A and restructuring in the capital market? Thank you.

 

　　2024-09-24 10:50:37

 

　　Wu Qing:

 

　　Thank you for your question. Mergers and acquisitions (M&A) and restructuring are indeed major events in the capital market. Supporting corporate M&A and restructuring to further promote efficient resource allocation is a critically important function of the capital market. Particularly in the current context—where global industrial transformation is accelerating and China’s economic structure is undergoing rapid upgrading and transformation—it is urgently necessary to fully leverage the pivotal role of corporate M&A and restructuring, thereby facilitating industrial consolidation and enhancing quality and efficiency. The new “National Nine Articles” lays out key measures to invigorate the M&A and restructuring market. To further stimulate vitality in the M&A and restructuring market, the CSRC, building on extensive research and extensive consultation with all relevant parties conducted in the previous phase, has recently drafted the six provisions on M&A mentioned earlier—the “Opinions on Deepening Reform of the M&A and Restructuring Market for Listed Companies.” These opinions adhere to a market-oriented approach and aim to better harness the capital market’s role as the primary channel for M&A and restructuring. The main contents of these opinions include:

 

　　First, we will strongly support listed companies in their transformation and upgrading toward new-quality productivity. The CSRC will actively encourage listed companies to engage in mergers and acquisitions and restructuring centered on strategic emerging industries and future-oriented sectors—including cross-industry M&A deals aimed at transformation and upgrading—as well as acquisitions of non-profitable assets that help strengthen and complete industrial chains and enhance the level of critical core technologies. This will guide more resource elements to converge toward new-quality productivity.

 

　　Second, we will actively encourage listed companies to strengthen industrial integration. China is the only country in the world that boasts all industrial sectors. At the same time, we also recognize that some industries are large in scale but lack strength, and numerous yet not necessarily superior. While the capital market continues to support the development of emerging industries, it will also keep assisting traditional industries in rationally enhancing industry concentration and improving resource allocation efficiency through restructuring. To support the demand for integration among listed companies, we will provide assistance by significantly streamlining the review procedures. Meanwhile, through arrangements such as “reverse linkage” with lock-up periods, we will encourage private equity investment funds to actively participate in mergers and acquisitions and restructuring.

 

　　Third, we will further enhance the regulatory tolerance. This has long been a key issue of considerable market concern. While continuing to strictly adhere to existing rules, the CSRC will also respect market principles, economic laws, and the laws governing innovation. In particular, with regard to matters such as restructuring valuations, performance commitments, intra-industry competition, and related-party transactions, we will further increase our tolerance based on actual circumstances, thereby better enabling the market to optimize resource allocation.

 

　　Fourth, we will make great efforts to enhance the efficiency of restructuring transactions in the market. Currently, the payment instruments available for restructuring are already quite diverse—beyond cash, there are also shares and convertible bonds, among others. Going forward, the CSRC will support listed companies in adopting payment methods such as phased issuance of shares and convertible bonds, phased payment of transaction consideration, and phased complementary financing, all tailored to the specific needs of each transaction arrangement, thereby further improving transaction flexibility and the efficiency of capital utilization. At the same time, we will establish a simplified review procedure for restructurings, significantly streamlining the review process, shortening review timelines, and boosting restructuring efficiency for listed companies that meet the relevant criteria.

 

　　Moreover, the vibrant M&A and restructuring market cannot do without the active role of intermediary institutions. The CSRC will guide securities firms and other intermediaries to further enhance their service levels, fully leveraging their capabilities in transaction matching and professional services to help listed companies carry out high-quality M&A and restructuring activities. The CSRC will also perform its regulatory duties in accordance with the law, crack down on all kinds of illegal and non-compliant behaviors, effectively maintain order in the restructuring market, promote orderly restructuring processes, and firmly and effectively safeguard the legitimate rights and interests of small and medium-sized investors.

 

　　That’s all I’ll answer for now. Thank you.

 

　　2024-09-24 10:51:07

 

 

A question from a reporter of the U.S. International Market News Agency (photographed by Zhao Yifan)

 

　　Reporter from the U.S. International Market News Agency:

 

　　May I ask, did the Federal Reserve’s 50-basis-point interest rate cut this month create room for further easing of China’s monetary policy? How does the People’s Bank of China assess the impact of the Fed’s rate cut on China’s foreign exchange market? Thank you.

 

　　2024-09-24 10:53:44

 

　　Pan Gongsheng:

 

　　Thank you for your question. Recently, major economies have adjusted their monetary policies. As you’ve seen, downward pressure on the RMB exchange rate has significantly eased, and the RMB has even begun to appreciate. On September 18, the Federal Reserve cut interest rates by 50 basis points—a move that marked the first rate cut by the Fed in several years, during which it had consistently been in a rate-hiking cycle. Meanwhile, several other central banks around the world, such as the European Central Bank, have already cut interest rates twice since June, totaling 50 basis points; the Bank of England cut rates by 25 basis points in August; and central banks in countries like Canada and Sweden have also shifted toward rate cuts. With the exception of the Bank of Japan, monetary policies in major economies have now entered a rate-cutting cycle, weakening the upward momentum of the U.S. dollar. As a result, the U.S. dollar index has generally declined, falling by 3% since August and currently hovering around 101. As the gap between domestic and global monetary policy cycles narrows, external pressures on the RMB exchange rate have noticeably eased. As of September 23, the RMB-to-dollar exchange rate stood at roughly 7.05 yuan per U.S. dollar, representing an appreciation of 2.4% since August.

 

　　The exchange rate is a relative price relationship between currencies, and its influencing factors are highly diverse—such as economic growth, monetary policy, financial markets, geopolitics, and sudden risk events—all of which can affect exchange rates.

 

　　From an external perspective, influenced by diverging economic trends among various countries, geopolitical changes such as the U.S. election, and volatility in international financial markets, uncertainties remain regarding the external environment and the direction of the U.S. dollar.

 

　　From the perspective of China's domestic situation, we believe that the RMB exchange rate still has a relatively stable and solid foundation.

 

　　First, from a macro perspective, the trend of economic stabilization and improvement will continue to consolidate and strengthen. The People's Bank of China’s recent introduction of relatively strong monetary policies will help support the real economy, boost household consumption, and enhance market confidence.

 

　　Second, the balance of payments remained broadly stable. In the first half of the year, the current-account surplus as a percentage of GDP was 1.1%, which can be considered to be within a relatively reasonable range.

 

　　Third, the People's Bank of China and the State Administration of Foreign Exchange attach great importance to the development of the foreign exchange market. Market participants have become more sophisticated, trading behavior has become more rational, and the market’s resilience has significantly strengthened. In the first half of this year, the hedging ratio among import and export enterprises reached 27%, and the proportion of cross-border settlements in RMB for merchandise trade stood at 30%. These two figures are not overlapping; if we add them together, it means that approximately 50% of enterprises engaged in foreign trade exports are relatively less exposed to exchange-rate risks. As the People's Bank of China has repeatedly clarified to the market, under the backdrop of two-way fluctuations in the RMB exchange rate, participants should adopt a rational attitude toward exchange-rate volatility, strengthen their risk-neutral mindset, and avoid “betting on the direction of the exchange rate” or “speculating on one-sided trends.” Enterprises should focus on their core businesses, and financial institutions should remain committed to serving the real economy.

 

　　The People’s Bank of China has a clear and transparent stance on exchange-rate policy. There are several key points: First, we uphold the decisive role of the market in exchange-rate formation and maintain exchange-rate flexibility. Second, we will strengthen expectation guidance to prevent the foreign-exchange market from developing one-sided, unanimous expectations that could become self-fulfilling, thereby guarding against the risk of exchange-rate overshooting and ensuring that the RMB exchange rate remains broadly stable at a reasonable and balanced level.

 

　　Thank you!

 

　　2024-09-24 10:55:09

 

CNBC reporter asks a question (photographed by Zhao Yifan)

 

　　CNBC reporter:

 

　　Analysts believe that the decline in Chinese government bond yields is partly due to market expectations of slower economic growth and looser monetary policy. What is the central bank’s response? What measures will it take in response? Thank you.

 

　　2024-09-24 11:00:41

 

　　Pan Gongsheng:

 

　　Discussion on this topic has become relatively calmer at present. Earlier, there was quite a bit of hype surrounding it, and the People's Bank of China has engaged in multiple rounds of communication with the market in an appropriate manner. In the earlier period, Chinese government bond yields declined partly because the People's Bank of China guided market interest rates downward through its policy interest rates, and partly due to the relatively slow pace of government bond issuance. Additionally, some of the decline can be attributed to weak risk awareness among small- and medium-sized financial institutions, which inadvertently fueled the trend and amplified the herd effect. Currently, China’s long-term government bond yields are hovering around 2.1%. The level of government bond yields reflects market-driven forces, and the People's Bank of China respects the role of the market. At the same time, there is no doubt that this environment provides a favorable monetary backdrop for China to implement an active fiscal policy.

 

　　However, we must also recognize that interest-rate risk is an important component of financial institutions’ risk management. The case of Silicon Valley Bank in the United States is highly significant. As everyone is well aware, this risk event reminds us that central banks need, from a macroprudential perspective, to monitor and assess market risks and take appropriate measures to mitigate and prevent the accumulation of risks. This is an essential responsibility of central banks.

 

　　Currently, the government bond yield curve, as an important price signal, still faces issues such as insufficient pricing at the longer end and inadequate stability. The central bank’s risk warnings on long-term government bond yields and its enhanced communication with the market are aimed at curbing the systemic risks that could arise from the herd effect and the potential one-sided downward movement in long-term government bond yields.

 

　　Maintaining a well-ordered trading environment in the bond market is also a responsibility of the central bank. Recently, the People's Bank of China has identified several instances in the bond market involving price manipulation, lending of accounts, and the transfer of benefits. We will intensify our efforts to investigate and punish illegal and non-compliant activities in the interbank bond market and will promptly disclose relevant information to the public. Earlier, the Traders Association has already made several cases public; these cases are currently under investigation. Once the investigations are completed, we will announce the findings to the entire society.

 

　　In recent years, as China’s financial market has rapidly developed, the scale and depth of the bond market have also steadily increased. Consequently, the conditions for the central bank to conduct open-market purchases and sales of government bonds and inject base money through the secondary market have gradually become mature. I already shared our plans with the public at the Lujiazui Forum on June 19. Currently, the People’s Bank of China has incorporated government bond trading into its monetary policy toolkit and has begun pilot operations. Our operational approach is fully transparent—details are publicly available on the PBC’s website. We are also working closely with the Ministry of Finance to jointly study ways to optimize the issuance schedule, maturity structure, and custody system for government bonds. The entire process of the People’s Bank of China’s government bond trading in the secondary market will be carried out in a gradual and phased manner.

 

　　Thank you!

 

　　2024-09-24 11:06:00

 

Phoenix TV reporter asks a question (photographed by Xu Xiang)

 

　　Phoenix TV reporter:

 

　　We’ve noted that this year’s newly issued “Nine Measures” set forth clear requirements for listed companies to enhance their investment value and strengthen their market capitalization management. Could you please tell us how the CSRC plans to advance these efforts in the next step? Thank you.

 

　　2024-09-24 11:24:18

 

　　Wu Qing:

 

　　Thank you for your question. Listed companies are the cornerstone of the market. Only when listed companies continuously create value for investors and deliver steady returns can the capital market thrive and flourish. The CSRC actively supports listed companies in improving operational efficiency and enhancing profitability, while the State-owned Assets Supervision and Administration Commission of the State Council is also stepping up its assessment of listed state-owned enterprises under a “one enterprise, one policy” approach, with greater emphasis on managing these companies’ market capitalization. Listed companies must strive to enhance the transparency of their information disclosure and the standardization of corporate governance, strengthen communication with investors, and comprehensively employ various methods—including dividends and share buybacks—to reward their investors. Since the beginning of this year, more than 95% of listed companies have held earnings briefings; 663 companies have announced interim dividends totaling 533.7 billion yuan, and over 1,500 companies have actually carried out share buybacks, with cumulative buyback amounts exceeding 100 billion yuan.

 

　　To enhance the quality of listed companies and boost their investment value, listed companies must earnestly assume their responsibilities. Currently, we have collaborated with relevant ministries and commissions to develop guidelines for managing the market capitalization of listed companies, requiring these companies to conduct market-capitalization management in strict accordance with the law. First, the board of directors is urged to place great emphasis on investor protection and returns by strengthening operational management, improving profitability, and enhancing core competitiveness—thus laying a solid foundation for effective market-capitalization management. Second, listed companies are encouraged to actively employ market-capitalization management tools such as mergers and acquisitions, equity incentives, and share buybacks by major shareholders to elevate their investment value. Third, listed companies are required to establish a regular share-repurchase mechanism and are encouraged to proactively plan and reserve sufficient funds where feasible. Fourth, companies that have long been trading below net asset value are required to formulate value-enhancement plans, evaluate their implementation effects, and publicly disclose these results, thereby fostering market discipline. Fifth, companies included in major stock indices are required to take their responsibilities seriously, develop market-capitalization management systems, clearly define their roles and corresponding measures, and regularly disclose their implementation status. It is important to emphasize here that while strengthening market-capitalization management, listed companies and related parties must also enhance their compliance awareness and must not engage in illegal or non-compliant activities such as market manipulation or insider trading under the guise of market-capitalization management.

 

　　We will soon release for public comment the guidelines on market capitalization management. At the same time, in collaboration with relevant government departments, we will promote the establishment of a market-oriented incentive and constraint mechanism for share repurchases by listed companies, thereby stimulating the intrinsic motivation of major shareholders, senior executives, and other relevant parties, and further enhancing the investment value of listed companies. Thank you.

 

　　2024-09-24 11:24:39

 

 

A reporter from Cover News asks a question (photographed by Xu Xiang)

 

　　Cover News Reporter:

 

　　Insurance companies are important institutional investors in the capital market. Recently, the State Council issued the “Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry,” which emphasizes leveraging the long-term investment advantages of insurance funds. Could you please tell us what new measures the Financial Regulatory Administration is taking to promote pilot reforms for long-term investment by insurance funds and support their participation in the development of the capital market? Thank you.

 

　　2024-09-24 11:25:07

 

　　Li Yunze:

 

　　Thank you for your question. The State Council has just released the new “Ten Measures” for insurance, providing comprehensive deployment and systematic planning for the high-quality development of the insurance industry. As a result, China’s insurance sector is now poised to seize a rare, historic opportunity. We can foresee that in the future, China’s insurance market will continue to expand, and both insurance penetration and depth will keep rising steadily. With its large scale, long-term investment horizon, and stable funding sources, insurance capital naturally possesses the characteristics of patient capital and is bound to become an important value investor supporting the healthy and sustainable development of the capital market.

 

　　The capital market undoubtedly plays a crucial role in both financial stability and economic development. The General Administration of Financial Regulation has consistently attached great importance to the capital market and has actively guided banks, insurance companies, and asset management institutions to safeguard its stability. Earlier, with the approval of the State Council, we facilitated a pilot program involving China Life and Xinhua Life Insurance, which jointly initiated the establishment of a private equity fund aimed at raising insurance funds for investment in the capital market. With a registered capital of 50 billion yuan, this fund has officially begun its investment operations and is currently progressing smoothly.

 

　　Next, we will continue to support the steady and healthy development of the capital market. First, we will expand the pilot program for long-term investment by insurance funds and encourage other qualified insurance institutions to establish private equity mutual funds, thereby further increasing our investment in the capital market. Second, we will urge and guide insurance companies to optimize their performance evaluation mechanisms and encourage and guide insurance funds to engage in long-term equity investments. Third, we will encourage wealth management firms and trust companies to strengthen their capacity-building in equity investment, issue more long-term equity products, actively participate in the capital market, and foster and grow patient capital through multiple channels. Thank you.

 

　　2024-09-24 11:25:32

 

 

A reporter from Economic Daily asks a question (photographed by Xu Xiang).

 

　　Economic Daily reporter:

 

　　Over the past period, Central Huijin Investment Co., Ltd. has significantly increased its holdings of ETFs. What is the CSRC’s view on this? Thank you.

 

　　2024-09-24 11:25:54

 

　　Wu Qing:

 

　　Thank you for your question. The capital market is a highly transparent one. As everyone has seen, over the past period, Central Huijin Investment Ltd. has continuously stepped up its holdings of ETFs, fully demonstrating the strong confidence that state-owned investment institutions have in the investment value of the A-share market. It’s fair to say that this has played a very important role in stabilizing the market and boosting investor confidence. We’ve also noted that many domestic and overseas investment and research institutions believe that A-share valuations are at historically low levels, making their investment appeal particularly prominent. The CSRC, together with relevant parties, will further support Central Huijin Investment Ltd.’s efforts to increase its holdings and expand its investment scope, thereby encouraging various medium- and long-term funds—including those managed by Central Huijin—to invest more actively in the stock market. Just now, Director Yunze also mentioned arrangements to support insurance companies’ entry into the market. We will continue to actively encourage all types of capital, including insurance funds, to step up their participation in the market and provide an even better policy environment. By further strengthening our strategic reserve forces, we will work together wholeheartedly to promote the stable and healthy development of the capital market. Thank you.

 

　　2024-09-24 11:26:26

 

　　Shou Xiaoli:

 

　　The press conference has been going on for an hour and a half, and due to time constraints, this will be the last question.

 

　　2024-09-24 11:37:01

 

A question from a Financial Times reporter (photographed by Xu Xiang)

 

　　Financial Times reporter:

 

　　What are the main considerations behind establishing securities-fund-insurance swap facilities and special relending programs to support listed companies in share buybacks and major shareholders in increasing their equity holdings? How will the central bank carry out these operations? Thank you.

 

　　2024-09-24 11:39:26

 

　　Pan Gongsheng:

 

　　Thank you for your question. To maintain the stability of our country’s capital market and boost investor confidence, drawing on international experience as well as the People’s Bank of China’s own past practices, the People’s Bank of China, in consultation with the China Securities Regulatory Commission and the Financial Regulation Administration, has introduced two structural monetary policy tools to support the stable development of the capital market. This also marks the first time that the People’s Bank of China has innovated structural monetary policy tools specifically to support the capital market.

 

　　The first tool is the Securities, Funds, and Insurance Companies Swap Facility. This initiative supports eligible securities firms, fund companies, and insurance companies—entities that will be identified by the China Securities Regulatory Commission and the National Administration of Financial Regulation according to specific criteria. These institutions can use their holdings of bonds, stock ETFs, constituents of the CSI 300 Index, and other similar assets as collateral to exchange with the central bank for highly liquid assets such as government bonds and central bank bills. Compared to other assets held by market institutions, government bonds and central bank bills differ significantly in terms of credit rating and liquidity. Many institutions currently hold assets that, under the current circumstances, lack sufficient liquidity. By swapping these assets with the central bank, they can obtain higher-quality, more liquid assets, greatly enhancing their ability to raise capital and increase their equity holdings. We plan for the initial phase of this swap facility to have a scale of 500 billion yuan, with the possibility of expanding the scale in the future depending on market conditions. I discussed with Chairman Wu Qing that as long as this initiative is executed effectively, after the initial 500 billion yuan, we could easily add another 500 billion yuan—or even launch a third 500-billion-yuan round. I believe this approach is entirely feasible and open-ended. The funds obtained through this tool can only be used for investments in the stock market.

 

　　The second tool is the repurchase and increase-in-holding of shares through relending. This tool encourages commercial banks to extend loans to listed companies and their major shareholders, which can then be used for repurchasing and increasing their holdings of listed-company shares. In fact, share repurchases and increases in holdings by shareholders and listed companies are very common trading practices in international capital markets. The central bank will provide relending to commercial banks at a 100% funding support ratio, with a relending interest rate of 1.75%. Commercial banks will lend to their clients at an interest rate of around 2.25%, meaning they can add up to 0.5 percentage points to this base rate. At present, this 2.25% interest rate is already quite low. The initial quota is 300 billion yuan; if this tool proves effective—and as Chairman Wu Qing and I have discussed—we could potentially allocate another 300 billion yuan, or even launch a third round of 300 billion yuan, if necessary. However, we’ll need to closely monitor market conditions and conduct thorough assessments before proceeding further. This tool is applicable to listed companies of various ownership structures, including state-owned enterprises, private enterprises, and mixed-ownership enterprises—we do not differentiate based on ownership type. The People’s Bank of China will work closely with the China Securities Regulatory Commission and the State Administration of Financial Regulation, and we’ll also need the cooperation of market institutions to ensure the successful implementation of this initiative.

 

　　Thank you, everyone!

 

　　2024-09-24 11:42:50

 

　　Shou Xiaoli:

 

　　Thank you to the three speakers, and thank you to all the journalists for your participation. That’s all for today’s press conference.

 

　　2024-09-24 11:47:56