Rizhao City, Shandong Province has launched a number of financial measures to benefit and assist enterprises, continuously strengthen financial services for private enterprises and promote the development of the private economy. The picture shows staff of Shandong Wynn New Energy Vehicle Industry Co., Ltd. working on the production line. Photo by Xinhua News Agency reporter Guo Xulei

What is the effectiveness of monetary policy in 2024? How to implement moderately loose monetary policy in 2025? The State Council Information Office held a series of press conferences on "The Effectiveness of China's High-Quality Economic Development" on January 14. Relevant officials from the People's Bank of China and the State Administration of Foreign Exchange introduced the relevant situation and responded to hot issues at the meeting.

Monetary policy has achieved good results in 2024

Xuan Changneng, deputy governor of the People's Bank of China, said that the monetary policy has achieved good results in 2024, and the total financial volume has grown reasonably. At the end of December 2024, the stock of social financing scale increased by 8% year-on-year, the balance of broad currency M2 increased by 7.3% year-on-year, and the balance of RMB loan increased by 7.6% year-on-year, both higher than the nominal economic growth rate.

In terms of total volume, maintain stable growth of monetary credit - comprehensively use a variety of monetary policy tools to maintain a reasonable abundance of liquidity, promote the scale of social financing and the reasonable growth of monetary credit, and guide the continued decline of loan interest rates. Last year, the statutory reserve ratio was reduced by 1 percentage point twice, and the central bank's policy interest rate was reduced by 0.3 percentage points twice, both of which were the largest in recent years.

In terms of structure, increase support for key areas - establish a 500 billion yuan re-loan for scientific and technological innovation and technological transformation, effectively guide financial institutions to increase financial support for first-time loans for technology-based small and medium-sized enterprises, as well as for technological transformation and equipment renewal projects in key areas. As of the end of last year, there were 22,000 bank marketing docking projects, and loan contracts have been signed waiting for companies to withdraw money at any time to reach 838.9 billion yuan. A 300 billion yuan re-lending for affordable housing was launched, the lower limit of mortgage interest rate policy was abolished, and the interest rate of existing mortgages was promoted to reduce the borrower's mortgage interest rate by about 150 billion yuan each year.

In terms of transmission, clear the channels for policy interest rate transmission - clearly state the main policy interest rates, gradually straighten out the interest rate transmission relationship from short to long; strengthen the implementation of interest rate policies, manage idle funds, vigorously rectify manual interest rate replenishment, optimize the self-discipline management of interest rates for public deposits and interbank current deposits, save banks' interest expenses, and create conditions for reducing social financing costs and balancing the sustainable development of banks.

The RMB exchange rate remains basically stable

Xuan Changneng introduced that the international situation in 2024 is complex and changeable, and multiple factors have driven the turbulent and strengthened the US dollar index. China's foreign exchange market has shown strong resilience. The RMB exchange rate generally showed a two-way fluctuation trend, which has maintained basic stability under complex situations and performed well among major currencies, creating favorable conditions for China's independent implementation of monetary policy and played a positive role in stabilizing the economy and foreign trade.

At the end of 2024, the RMB Exchange Rate Index (CFETS), which measures the exchange rate changes of the RMB against a basket of currencies, was 101.47, up 4.2% from the end of the previous year; the RMB exchange rate against the US dollar closed at 7.2988, depreciating by 2.8% from the end of the previous year, and the US dollar index rose by 7% during the same period, fully reflecting the resilience of the RMB.

Li Bin, deputy director of the State Administration of Foreign Exchange, introduced that cross-border trade and investment were more active in 2024, with the total foreign income and expenditure of non-bank sectors such as enterprises and individuals increasing by US$14.3 trillion, an increase of 14.6% from 2023, and a record high; the domestic RMB foreign exchange market transaction volume exceeded US$41 trillion, an increase of 14.8% from 2023. The balance of payments remains basically balanced. The current account surplus in the first three quarters of 2024 was US$241.3 billion, with a ratio of 1.8% to GDP, which is in the internationally recognized equilibrium range. It is preliminary estimate that the current account still maintains a reasonable surplus in the fourth quarter. Foreign investment grew rapidly, with foreign assets exceeding US$10 trillion for the first time at the end of September 2024. Capital directly investing in China, securities investment in China and other funds maintained net inflows. The balance of foreign exchange reserves has remained stable at more than US$3.2 trillion.

Xuan Changneng said that China's economic foundation is solid, the current account maintains a surplus, cross-border capital flows are independent balanced, foreign exchange reserves are sufficient, and the foreign exchange market is resilient, providing certainty and strong support for maintaining the basic stability of the RMB exchange rate.

Add to adjust and optimize policy strength

Xuan Changneng said that the People's Bank of China will implement moderately loose monetary policies in 2025, comprehensively use a variety of monetary policy tools such as interest rates and reserve requirement ratios to maintain sufficient liquidity and ensure a loose social financing environment. Strengthen the implementation of interest rate policies and further reduce the cost of social comprehensive financing on the basis of maintaining healthy operation of the financial industry. Scientifically make good use of structural monetary policy tools and give full play to the dual functions of total and structural monetary policy tools.

In response to the "five major articles" of science and technology finance, green finance, inclusive finance, pension finance, and digital finance, Zou Lan, spokesperson of the People's Bank of China, introduced that the People's Bank of China will further improve the top-level system design, formulate relevant guiding opinions, focus on key areas and weak links to refine policy measures, and comprehensively improve the quality and efficiency of financial services to the real economy.

"First, strengthen positive incentives, give full play to the leading role of structural monetary policy tools and macro-credit policies, strengthen cooperation with fiscal policies, and guide financial institutions to increase credit resource investment and optimize credit structure. Second, improve the service capabilities of financial institutions, improve the internal incentive and constraint mechanism of financial institutions, further enrich the financial product spectrum, and enhance the risk assessment capabilities and financial service technology level. Third, broaden financing channels, support enterprises to raise funds through bonds, equity and other markets, and increase the proportion of direct financing." Zou Lan said.

"In the next stage, macroeconomic policies will further strengthen countercyclical adjustments. We will adjust and optimize policy intensity and rhythm at the right time based on the domestic and international economic and financial situation and financial market operation to support the realization of the annual economic and social development goals." Xuan Changneng said.