Economic Daily:

The Central Financial Work Conference proposed focusing on accomplishing the "Five Major Tasks" and clarifying the future development direction of the financial sector. Could you please clarify what specific new deployments are you referring to? And what are your considerations in the next stage?

Zhu Hexin:

Thank you for your questions. I will answer them. The "Five Major Tasks" have garnered significant attention and high expectations. They are also important measures to implement the directives of the Central Financial Work Conference, and the PBC and SAFE are making every effort to promote them.

The Central Financial Work Conference emphasizes the importance of excelling in technology finance, green finance, pension finance, inclusive finance and digital finance. We refer to these as the "Five Major Tasks," which provide high-quality financial services for socio-economic development. Since the beginning of this year, the PBC has fully implemented the decisions and arrangements of the CPC Central Committee and the State Council. We have pursued a prudent and moderately flexible monetary policy, effectively and precisely leveraging monetary policy tools to address both overall and structural concerns. We have diligently carried out the "Five Major Tasks" and guided financial institutions to increase support for these tasks, as well as key areas and weak links of the national economy, such as the private sector. I would like now to share a set of data with everyone. The credit structure continues to be optimized, with credit growth maintaining a relatively high level. The availability of financing has significantly improved, and financing costs have remained stable with a downward trend. As of the end of March, the year-on-year growth rates for loans in high-tech manufacturing, loans for technology-oriented small and medium-sized enterprises, loans for inclusive small and micro businesses, loans for agriculture-related activities and loans for the private economy were 27.3%, 20.4%, 20.3%, 13.5% and 10.7%, respectively. By the end of 2023, the growth rate of green loans was even higher at 36.5%, significantly surpassing the overall loan growth rate. As mentioned earlier, the overall loan growth rate was 9.6%. The loan approval rate for technology-oriented small and medium-sized enterprises reached 47.9%, more than double the rate in 2017. The number of credit beneficiaries in the inclusive small and micro business sector has exceeded 60 million. In March, the weighted average interest rate for new inclusive small and micro business loans was 4.36%, reaching a historic low. 

With the approval of the central government, the PBC established a credit market department to take the lead in promoting the work of the "Five Major Tasks." Next, we will increase support from various aspects, including policy frameworks, incentives, constraints and the development of financial service capabilities.

First, we will strengthen top-level design and systematic planning to promote the formation of a "1+5" policy framework. The "1" refers to the overall institutional design, while the "5" represents the respective measures of the "Five Major Tasks." We will work together with relevant departments to clarify the work goals, key tasks and implementation pathways. On one hand, we will ensure the effective implementation of policies that have already been introduced. Previously, we, along with relevant departments, issued policies such as the Action Plan to Increase Support for Financing of Technology-oriented Enterprises and the 25 measures to boost financial support for private firms. Recently, the PBC, in collaboration with the National Development and Reform Commission (NDRC) and six other departments, issued the Guiding Opinions on Further Strengthening Financial Support for Green and Low-Carbon Development . On the other hand, while three of the "Five Major Tasks" already have a certain foundation, efforts are being intensified to promote the remaining two tasks, namely, pension finance and digital finance. This will contribute to making the institutional design of the "Five Major Tasks" more robust and the policy framework more solid.

Second, policies alone are not enough. We should guide financial resources to focus on key areas through incentive. We need to give full play to structural monetary policy tools, properly use the newly established 500 billion yuan ($69 billion) relending loans for technological innovation and improvements and support small and medium-sized technology enterprises and key sectors in upgrading to digital, intelligent and high-end technologies. Credit lines for inclusive loans to micro and small businesses will be raised to no more than 20 million yuan per borrower , so as to direct more financial resources to accurately invest in inclusive fields. We need to promote and improve financial, statistical indicators in relevant fields, and study and develop the financial service evaluation in key areas such as technology finance and digital finance.

Third, the implementation should rely on financial institutions. We encourage financial institutions to leverage their strengths in organization, management and technology, to use information methods such as the internet and big data, to enhance the capacities in services associated with technology, sustainability and SMEs, to improve the adaptability and inclusiveness of financial services, to actively promote pilot reforms in regional financial innovation in areas such as technology and green finance and to create a typical service model that can be replicated and promoted. 

With top-level design policies in place, incentive and constraint tools are gradually improved, with financial institutions playing a crucial role in providing vitality and resources to the operating entities. Therefore, all departments should work together, link every step and generate synergy, enabling the operating entities to be more dynamic and healthy.

Focusing on the "five priorities" is an important aspect of promoting high-quality development of financial services for the real economy and crucial part of deepening the structural reform of financial supply. The PBC will strengthen cooperation with relevant industrial regulatory departments, fully rally the enthusiasm of financial institutions and continuously enhance the effectiveness of financial support for the "five priorities."

When giving my introduction, some policy tools, especially structural policy tools, are of great concern to everyone. The structural policy tools have played a significant role in supporting major strategies, key areas and vulnerable aspects of national economy. Since Mr. Zou Lan is here today, we invite him to explain more.

Zou Lan:

Mr. Zhu mentioned that the financial sector should take the application of the "five priorities" as a key focus, so as to serve the high-quality development of the real economy and continue to optimize credit structure. This not only reflects the specific implementation of the central government's deployment, but also meets operation and development needs for the financial industry. However, the financial business is usually hard to change. There is still a process of capacity building in optimizing internal assessment objectives and mechanisms as well as improving the quality and efficiency of products and services. In order to encourage financial institutions to optimize their credit structure more quickly, the PBC has been continuously innovating its operations for a period of time. On the basis of the original relending loans, the PBC has set up targeted structural monetary policy tools in the form of preferential interest rates. These tools provide incentives for financial institutions to optimize their products and services and to compensate for certain operational costs that financial institutions may experience in the short term. 

From the operational perspective, commercial banks make their own choices and bear the risks of issuing loans to enterprises in accordance with market-oriented principles; then, the PBC issues relending loans based on the commercial banks' applications and actual loan conditions. Structural monetary policy tools do not change the nature of business when commercial banks provide loans and central banks provide relending loans to commercial banks. This does not mean that the central bank directly or indirectly issues loans to enterprises. We are aware that there have been some misunderstandings in discussions regarding this matter. In terms of implementation principles, structural monetary policy adheres to the principles of "focusing on key areas, being reasonable and appropriate, and advancing and retreating in a timely manner." As of the end of March 2024, the total amount of these tools is 7.5 trillion yuan, accounting for approximately 17% of the central bank's total assets. There are a total of 10 existing tools, which have been continuously integrated and optimized; tool-supported areas have achieved basic coverage of the "five priorities."

That's all from me. Thanks.