China’s reserve bank stated on January 6, 2021 that it will be making its monetary policy more flexible, targeted and appropriate this year. The country will begin focusing on supporting smaller companies as the Chinese economy tries to recover following the COVID-19 outbreak.
The People’s Bank of China (PBoC) said it would depend on its structural policy tools and related credit policies in order to extend support to small enterprises. The central bank added that it will be extending deferred loan repayments for SMBs.
The PBoC has reportedly introduced several new measures to support the economy. However, analysts claim that the bank has adopted a steadier and more conservative stance as the country begins to make a recovery.
The PBoC confirmed that it will be scaling back support for the economy this year, however, there are still fears or concerns of derailing a recovery from a slump created due to COVID. Policy analysts have also noted that China’s debt defaults are quite likely to prevent the country from tightening in the near future.
The PBoC added that it will be extending reforms of its loan prime rate. It also intends to support deposit rate liberalization. The bank will also update its regulations and increase its scrutiny of financial activities by Internet platforms like Alibaba’s Ant Group and Alipay, and Tencent Holdings’ line of financial products (among many others). Specifically, the PBoC will be regulating payment services, and will require personal credit ratings companies to hold appropriate licenses.
The reserve bank will not allow companies to “over-market” their financial products. The PBoC will also prohibit these service providers from trying to lure customers into excessive borrowing or spending. The PBoC also mentioned that it will be implementing prudential management of property finance while improving a policy system of financial support for the Chinese rental housing sector.
