Balancing Growth Stabilization and Risk Prevention: Central Bank Outlines Seven Key Tasks for Second Half of the Year

    On August 1, The People's Bank of China (hereinafter referred to as “the central bank”) convened its 2025 second-half work conference and the regular meeting on advancing the rectification of issues identified in the central inspection (hereinafter referred to as “this meeting”). The meeting clarified that the central bank will implement and refine a moderately accommodative monetary policy, strengthen support for technological innovation, boost consumption, support small and micro enterprises, stabilize foreign trade, further deepen financial reforms and high-level opening up, prevent and defuse financial risks in key areas, and diligently carry out all key tasks in the second half of the year to promote high-quality economic development.

    Professor Tian Lihui, a finance expert at Nankai University, told Securities Daily that the central bank's priorities for the second half balance “stabilizing growth” with “risk prevention,” reflecting a dual-engine approach of technological innovation and financial stability, alongside flexible policy toolkit deployment and structural reform.

    Continuing to Implement

    Moderately Loose Monetary Policy

    In outlining its next-phase priorities, the central bank identified seven key tasks: continuing to implement a moderately accommodative monetary policy; prioritizing support for the real economy; preventing and resolving financial risks in key sectors; steadily advancing RMB internationalization; promoting financial market reform and opening-up; deepening international financial cooperation; and continuously enhancing financial management and service levels.

    Regarding the continuation of a moderately accommodative monetary policy, the central bank specified key tasks such as “comprehensively utilizing various monetary policy tools to maintain ample liquidity, guiding financial institutions to sustain reasonable credit growth, and ensuring that the growth of social financing scale and money supply aligns with economic growth and overall price level targets,” as well as “activating existing funds, utilizing new funds effectively, and improving capital utilization efficiency.”

    Ming Ming, chief economist at CITIC Securities, analyzed in an interview with Securities Daily that this meeting maintained the “moderately loose” monetary policy stance. Compared to the January 2025 PBC work conference's emphasis on “maintaining ample liquidity and stable growth in aggregate financial aggregates,” this meeting specified “maintaining ample liquidity and guiding financial institutions to sustain reasonable credit growth,” continuing support for real economy financing. Additionally, the meeting emphasized “activating existing resources, utilizing new resources effectively, and improving capital utilization efficiency,” highlighting increased focus on incremental policy measures.

    Regarding work conducted so far this year, the meeting acknowledged that “financial support for sustained economic improvement has been strengthened.” This includes reductions in policy interest rates, rates for structural monetary policy tools, and personal housing provident fund loan rates, which have contributed to lower financial market interest rates and overall social financing costs.

    Tian Lihui believes that in terms of aggregate tools, the central bank will flexibly employ instruments such as reserve requirement ratio cuts and MLF (Medium-term Lending Facility) to maintain reasonable and ample liquidity. The key to work in the second half of the year lies in “activating existing resources,” namely optimizing credit resource allocation, preventing idle capital, and improving capital utilization efficiency.

   Highlighting Key Directions

   for Serving the Real Economy

    This year, financial services have enhanced the quality and efficiency of economic structural transformation and high-quality development. The central bank has strengthened coordination across the “five major financial initiatives.” Focusing on supporting technological innovation, boosting consumption, small and micro enterprises, and stabilizing foreign trade, it has reinforced policy coordination. This includes establishing a “Technology Board” in the bond market, creating risk-sharing tools for technology innovation bonds, and launching re-lending programs for consumption and elderly care services. Quotas for re-lending supporting technological innovation and technical upgrades, as well as re-lending supporting agriculture and small businesses, have been increased. By the end of June, loans to technology, green industries, inclusive small and micro enterprises, elderly care, and digital economy sectors had grown by 12.5%, 25.5%, 12.3%, 43%, and 11.5% year-on-year, respectively.

    According to Tian Lihui, the central bank's initiatives in the first half—including the creation of the risk-sharing tool for technology innovation bonds, the introduction of re-lending for consumption and elderly care services, and the increase in re-lending for technology innovation and technical transformation—have effectively supported the high-quality development of the real economy. The 12.5% year-on-year growth in technology loans and 43% increase in elderly care industry loans during the first half indicate that capital has flowed into high-growth sectors.

    Regarding key directions for financial services to the real economy in the second half, the meeting proposed leveraging re-lending policies for technological innovation and technical transformation to accelerate loan growth for technology-based SMEs, while intensifying financing support for critical areas like “two major sectors” and “two new sectors.” It also emphasized resolving structural contradictions in key industries to promote industrial upgrading.

    “Compared to the statement at the beginning of the year at the 2025 People's Bank of China Work Conference to ‘further increase financial support for technological innovation and consumption promotion,’ this meeting further detailed specific support areas and clarified key service directions for the real economy,” Ming Ming noted. Ming Ming anticipates that in the next phase, the central bank may intensify financial support for the technological innovation sector: on one hand, providing low-interest loans to eligible technology-based enterprises through re-lending tools; on the other hand, potentially introducing new structural monetary policy tools to support these enterprises.

    Tian Lihui believes that the financing costs for technology-based enterprises will further decrease in the future, accelerating the transformation of technological achievements, driving industrial chain upgrades, and injecting long-term growth momentum into the economy.

    Additionally, the meeting emphasized “maintaining exchange rate flexibility, strengthening expectation guidance, and preventing excessive exchange rate fluctuations.” Ming Ming noted that given the overall strength of the RMB exchange rate in the first half of this year, the central bank remains focused on     “stabilizing the exchange rate.” It will steadily and prudently advance RMB internationalization by expanding its use in trade settlements while attracting global capital to increase allocations to Chinese assets.