At the press conference held by the State Council Information Office (SCIO) at 3 p.m. on Wednesday, January 24, 2024, Pan Gongsheng, Governor of the People’s Bank of China (PBOC), Zhu Hexin, PBOC Deputy Governor and Administrator of the State Administration of Foreign Exchange (SAFE), and Xuan Changneng, PBOC Deputy Governor, gave introductions to their work on implementing the arrangements made by the Central Economic Work Conference and providing financial services to support high-quality development of the real economy. They also answered questions from journalists. The transcript is as follows.

Shou Xiaoli, Deputy Director-General of SCIO Press Bureau and SCIO

Spokesperson: Good afternoon, ladies and gentlemen. Welcome to the SCIO press conference. Today we are glad to have PBOC Governor Pan Gongsheng, PBOC Deputy Governor and SAFE Administrator Zhu Hexin, and PBOC Deputy Governor Xuan Changneng at the conference. They will give introductions to their work on implementing the arrangements made by the Central Economic Work Conference and providing financial services to support high-quality development of the real economy. And then they will answer your questions.

Now, I’ll give the floor to Mr. Pan Gongsheng.

Pan Gongsheng, PBOC Governor: Thank you. Good afternoon, friends from the media. I’m glad to be here today together with Administrator Zhu Hexin and Deputy Governor Xuan Changneng and to have exchanges with you.
First of all, I want to thank you all for your long-time coverage of financial sector reform and development and the work of the PBOC and SAFE.

The Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core attaches great importance to financial work. In his remarks delivered at the 2023 Central Financial Work Conference, General Secretary Xi Jinping stressed the importance of pursuing a path of financial development with Chinese characteristics, promoting high-quality financial development, and accelerating steps to build a strong financial sector in China. The Central Economic Work Conference held at the end of last year clearly set out the general requirements, policy orientation, and key tasks for economic work in 2024. Recently, General Secretary Xi Jinping made an important speech at the opening ceremony of a study session attended by leading officials at the provincial and ministerial levels on promoting high-quality development of the financial sector. In the speech he gave instructions again on effectively carrying out financial work in the current and coming periods.

The PBOC and SAFE will act in a professional and pragmatic manner to implement the decisions and arrangements made by the CPC Central Committee. Firmly committed to the fundamental objective of providing financial services for the real economy, we will step up macro adjustments while strengthening counter-cyclical and inter-temporal adjustments, so as to consolidate and reinforce the economic recovery momentum and continuously advance high-quality economic development.

In 2024, we will focus on the following.

First, we will stick to a sound monetary policy, which will be conducted, as required, in a flexible, appropriate, targeted, and effective manner, to continue fostering a favorable monetary and financial environment for the stable growth of the real economy. Over the past year, we strengthened counter-cyclical adjustments when appropriate, having lowered twice both the required reserve ratios (RRRs) and the policy rates. Meanwhile, the interest rates on existing home loans were guided downward, and financial institutions were guided to maintain appropriate aggregates and a steady pace in the supply of credit. All these measures delivered positive effects. In 2024, in terms of aggregates, we will use a mix of monetary policy tools to keep liquidity adequate at a reasonable level and to ensure that the aggregate financing to the real economy (AFRE) and the money supply are aligned with economic growth and the expected target level of prices. We will properly manage the supply of new credit to achieve a balanced pace and make the credit growth more stable. Structurally, we will make continued efforts to optimize the credit structure and increase financial support for private enterprises and micro and small businesses (MSBs). We will effectively implement the 25 measures released recently on providing financial support for the private economy and work to enhance the quality and efficiency of financial services for the real economy. At the same time, attention will be paid to mobilizing the financial resources being used inefficiently to improve the efficiency in the utilization of existing funds. With regard to prices, we will balance internal and external equilibria, stabilize and bring down the overall financing costs, and keep the RMB exchange rate basically stable at an adaptive and equilibrium level.

Second, we will intensify financial support for major national strategies, key fields, and weak links, and put effort into developing technology finance, green finance, inclusive finance, pension finance, and digital finance. In 2023, we further enhanced the effectiveness of monetary policy in promoting economic restructuring, industrial transformation and upgrading, and the replacement of the old growth drivers. By guiding financial institutions to scale up credit support for key fields and weak links, we have seen inclusive MSB loans, loans to small and medium-sized technological enterprises, medium and long-term (MLT) loans to the manufacturing sector, and green loans all record growth rates significantly higher than the average growth rate of loans. In the coming period, we will continue to bring into play the role of monetary policy tools in adjusting both the aggregates and the structure, enhance the innovation of policy tools, and guide financial institutions to actively engage in technology finance, green finance, inclusive finance, pension finance, and digital finance. With the approval of the central government, the PBOC will establish the Credit Market Department to focus on the work related to these five areas.
Third, we will forestall and defuse financial risks in key fields in a prudent and effective manner. The eternal theme of financial work lies in financial risk prevention and control. Currently, financial risks in China are controllable overall, with financial institutions on the whole seeing sound operation and financial markets performing stably. Going forward, we will stress the building of capacities for financial risk monitoring, early warning, and assessment, and push for the establishment of an accountability mechanism for financial risk resolution, which matches power with responsibility and ensures compatibility between incentives and constraints. Based on market principles and the rule of law, we will work with local governments and relevant departments to defuse the risks associated with key fields and key institutions. In addition, we will improve the financial safety net and push further ahead with the launch of the Law on Financial Stability.
Fourth, we will continue to deepen financial reform and opening-up. In terms of advancing financial reform, we will put effort into building a financial market that is well-regulated, transparent, open, dynamic, and resilient; and we will further optimize the financing structure, the market system, and the product system to provide higher-quality and more efficient financing services for the development of the real economy. More work will be done to promote development of the credit reporting market and the payment market. Recently, the PBOC has been working with the Zhejiang provincial government to offer guidance to Qiantang Credit Reporting Co. on its application for the personal credit reporting license. And we will stay firmly committed to advancing high-standard opening-up of the financial sector. Institutional opening-up of the financial sector will go deeper, while the connectivity schemes between domestic and overseas financial markets will be expanded. Prudent and solid steps will be taken to advance RMB internationalization. At the same time, we will continue to support Hong Kong and Shanghai in their efforts to enhance their status as international financial centers.

Fifth, the PBOC will actively participate in international financial governance and deepen international financial cooperation. We will uphold multilateralism, strengthen dialogue and communication, and promote macro economic and financial policy coordination across the globe via platforms such as the Group of 20 (G20), the International Monetary Fund (IMF), and the Bank for International Settlements (BIS). In addition, we will implement the consensus reached by Chinese and U.S. heads of state at the San Francisco meeting and duly play our role as the lead agency in the China-U.S. and China-EU Financial Working Groups.

This year marks the 75th anniversary of the founding of the People’s Republic of China. It is our firm belief that under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, we will achieve success on the path of financial development with Chinese characteristics and contribute financial strength to the great cause of building China into a great country in all respects and advancing national rejuvenation on all fronts by pursuing Chinese modernization.

So much for a general introduction of our work. You are welcome to ask questions.

Shou Xiaoli: Thank you, Governor Pan. Now the floor is open for questions. Please identify your news outlet before raising questions.

CNBC: If the Federal Reserve (Fed) does not raise interest rates this year, will there be more room for the PBOC to adjust its monetary policies? Thank you.

Pan Gongsheng: Thank you for your question. I noticed that there have been a lot of discussions on this issue by the CNBC recently, including many expert talks and discussions. That is a good question. All parties now are paying close attention to the changes in monetary policies of major central banks such as the Fed in 2024, and the PBOC is keeping a closer eye on them as well. As we know, since the Fed started to raise interest rates in March 2022, the policy rate in the US has risen by 525 basis points, reaching 5.25-5.5 percent, and the European Central Bank (ECB) has also raised interest rates for ten consecutive times, with the interest rate on the main refinancing operations rising from 0 percent to 4.5 percent. Therefore, it is clear that the interest rates in both the US and Europe are at historic highs currently. At the same time, we also see that the effects of rapid rate hikes on economic growth, inflation and financial markets in developed economies are emerging. There are also a lot of discussions in the market on possible interest rate cuts by both the Fed and the ECB in 2024. Overall, there has been a sign of change in the direction of the Fed’s monetary policy in 2024.

Over the past year, we have also seen some fluctuations in the US dollar exchange rate, as influenced by market expectations on the US policy rate. The US dollar index once rose to 114 in 2022, the highest since 2002, and throughout 2023, it largely remained above 100 while hovering around 103 more recently. As there is a strong correlation between changes of the US dollar index and expectations of the policy rate, market players widely expect that the momentum of a further significant appreciation of the US dollar index will weaken as the Fed’s interest rate hike comes to an end.

As for the impact of the Fed’s monetary policy shift on China’s monetary policy, I would like to say that China has been implementing a monetary policy that focuses on domestic conditions while striking a balance between internal and external equilibria. In 2023, faced with monetary policy spillovers from developed economies, the PBOC, based on domestic economic development conditions, lowered the policy rate and the RRR twice. As such, we effectively kept liquidity in the market adequate at a reasonable level and optimized the credit structure, thus providing strong support for the development of the real economy. Meanwhile, the PBOC and the SAFE stabilized market expectations through macro-prudential management and other measures based on the supply and demand of the foreign exchange market. On balance, the RMB exchange rate has remained basically stable under the complex situation.

Generally speaking, in 2024, the spillover of monetary policies in developed economies is expected to alleviate, and the gap between Chinese and US monetary policy cycles will narrow. Such a change in the external environment would be conducive to enhancing the independence of China’s monetary policy operations and expanding the space for monetary policy operations.

Thank you.

China Daily: The Central Economic Work Conference emphasized the needs to strike a balance between high-quality development and high-level security, deepen reform in key areas, and consolidate the fundamentals of foreign trade and investment. My question is, what is your opinion on China’s cross-border capital flows this year? What is your plan for the reform on facilitating foreign exchange transactions? Thank you.

Pan Gongsheng: It is fair to say that last year, changes in the internal and external environment had an impact on China’s foreign exchange market, but the market remained stable overall. I would like to invite Administrator Zhu Hexin to answer your questions.
 

Zhu Hexin, PBOC Deputy Governor and SAFE Administrator: Thank you for your questions. Just now, Governor Pan has answered your questions briefly, and I will add more details. We forged ahead and overcame many difficulties in 2023. From SAFE statistics, it is fair to conclude that China’s cross-border capital flows have become more stable recently, which is reflected in the relatively high net inflows under the current account. In 2023, current account surplus was about USD280 billion. Specifically, trade in goods recorded a surplus of over USD600 billion, the second highest on record. Moreover, foreign investment in China has also shown a positive trend recently. You may have noticed that since September 2023, net increase in domestic bonds holdings by overseas investors has exceeded USD64 billion in total for four consecutive months. We expect that China’s cross-border capital flows will become more stable this year, the current account will maintain a reasonable surplus, and foreign capital inflows under the capital account will become more active.

For one thing, China has a very complete industrial chain. Its continuous advancement of industrial upgrading and strong manufacturing capacity makes the trade in goods more competitive. As products and markets of foreign trade are increasingly diversified and policy effects on stabilizing foreign trade and regional cooperation are gradually materializing, we will see more new export growth drivers more market players, and more competitive products. In addition, more regions and countries will be willing to cooperate with us. All these factors will be conducive to enhancing the stability of foreign trade.

For another, foreign capital inflows under the capital account will become more active. As Governor Pan said when answering the question from CNBC, changes in the Fed’s monetary policy are widely expected in 2024, which would gradually relieve its spillover pressure and ease our external financial conditions. As such, international investment will become active, and foreign investment is expected to see a stable recovery. Besides, as we have a complete industrial chain and a super large market, the value of diversified investment in RMB assets will become increasingly prominent in years to come. This is something we are fully confident about.

Now I’ll move on to the second question about the facilitation of foreign exchange transactions. To facilitate foreign exchange transactions, we will coordinate high-quality development and high-level security on the whole and deepen the reform to move ahead with the facilitation process, aiming to serve the real economy and consolidate the momentum of economic recovery and long-term improvement. Specifically, we will work on the following five aspects.

First, we will make continuous efforts to actively facilitate cross-border trade, investment and financing. At present, our focus is mainly on sci-tech innovation and small and medium-sized enterprises (SMEs), and we will further expand the coverage. Meanwhile, we will support the development of new forms of foreign trade such as cross-border e-commerce and overseas warehouses, and facilitate cross-border financing of our sci-tech enterprises through relevant policy measures. We will show more support in our foreign exchange policies for SMEs and sci-tech enterprises at their start-up stage. In addition, many of you may be concerned about changes in the exchange rates. Enterprises that are supposed to be profitable will face a loss eventually if they mishandle the management of exchange rate risks, so we should play an active role in improving services on the management of exchange rate risks. In December 2023, we launched a package of nine measures on cross-border trade, investment and financing to facilitate foreign trade and investment. The key now lies in how to implement all these policies and constantly evaluate and improve the policies in a way that truly facilitates and benefits enterprises and the people, which is of great significance. This is the first aspect.

Second, we will continue to steadily push forward high-level institutional opening-up. We will expand the pilot programme of high-level opening of cross-border trade and investment at a steady pace, and improve the pilot program of integrated domestic and foreign currency cash pooling for multinational corporations. Besides, as many enterprises have such demands, we will also work on promoting the program based on the pilot results. Specifically, we will unify the management rules on funds invested in China’s securities and futures by overseas investors, support regional opening-up and innovation, and facilitate the connectivity between domestic and overseas financial markets, so as to attract more foreign financial institutions and long-term capital to invest and operate in China.

Third, we will continue to take effective steps to promote RMB internationalization in a stable and prudent manner. RMB internationalization has become a mainstream trend. Last year, the proportion of cross-border RMB receipts and payments on trade in goods increased rapidly, registering 25 percent, the highest level in recent years. Going forward, we will focus on facilitating trade and investment, strengthening the coordination between RMB and foreign currencies, and further improving policies and infrastructure related to cross-border RMB, so as to better meet the needs of overseas investors in purchasing and holding RMB assets as well as hedging risks. In addition, we will actively support the steady development of offshore RMB markets, with a particular focus on boosting the development momentum of the offshore RMB market in Hong Kong as a central hub.

Fourth, we will make continuous efforts to improve the integrated regulation of the foreign exchange market from the perspectives of macro prudential management and micro regulation. For one thing, we will improve the monitoring, early warning and response mechanism for cross-border capital flows, strengthen communication with the market and guidance on the expectations, and keep the RMB exchange rate basically stable. For another, we will ensure all kinds of financial activities on the foreign exchange market are brought under regulation, strengthen cross-border RMB regulation, respond to anomalies as soon as they are detected, and crack down hard on illegal and irregular activities. Besides, you may have noticed that recently we have introduced the Administrative Measures for the Operation of Foreign Exchange Business of Banks (Trial), which has been well received by banks and are now in the pilot stage. A core issue here is about the mechanism ensuring that those who have fulfilled their duties shall not be held accountable, which is of great concern to all banks, and is thus reflected in the Measures. If the pilot is proven successful, we hope that more banks will join our system so that we can better serve enterprises and other business entities by facilitating cross-border trade.

Fifth, we will continuously work to improve the management on foreign exchange reserves with Chinese characteristics, which is also an area people are paying close attention to. We will spare no efforts to ensure the safety and liquidity of foreign exchange reserve assets as well as maintain and increase their value.

Thank you.

Reuters: We have seen that China’s economy maintained low inflation last year and some months saw a decrease in both the consumer price index (CPI) and producer price index (PPI), raising market concerns about deflationary pressures. I would like to ask what the PBOC’s view is on the trend of prices this year. What policy measures will be taken to cope with the possible risk of deflation? Thank you.

Pan Gongsheng: Thank you for your questions. Prices are an issue of general concern and I would like to share some of my views.
Recently, there has been a lot of discussions on this issue among journalists and scholars. In our discussion, it is necessary to analyze and look at this issue from a broader perspective and over a slightly longer time span. That is, we need to examine the trajectory of prices in both the world’s major economies and China in the past few years and consider the underlying logic. In response to COVID-19, major economies generally implemented accommodative fiscal and monetary policies in the past few years. The enormous impact of COVID-19 on global supply chains, along with geopolitical events such as the Russia-Ukraine conflict resulted in a general surge of inflation across major economies. For instance, the US experienced a record-high inflation rate of 9.1 percent in June 2022, while the Eurozone saw inflation reach its peak at 10.6 percent in October 2022.

In contrast, China maintained its normal monetary policy throughout the COVID-19 pandemic, with no sudden shifts. The industrial chain and supply capacity remained sound and stable. Despite soaring global inflation during that period, China sustained stable prices, avoiding both inflation and deflation. In 2021 and 2022, China’s CPI rose by 0.9 percent and 2 percent, respectively.

In the post-pandemic era, to contain high inflation, the central banks of the US and EU swiftly and frequently adjusted their monetary policies. Within just over a year, the Fed raised interest rates 11 times, resulting in a cumulative increase of 525 basis points, and the ECB raised interest rates 10 times by a total of 450 basis points. Such rapid and frequent adjustments to the policy rate over such a short period of time are uncommon in history. Meanwhile, the global supply chain gradually recovered after the end of the pandemic, leading to a general decline in commodity prices. We can see that the inflation in the US and EU has declined from the previous peak of approximately 10 percent to around 3 percent at present. We believe that this rapid and unexpected descent in inflation in developed economies also has an impact on price dynamics in China. The perspective I just shared is from a global standpoint. To put it vividly, inflation in developed economies has fallen from the tenth floor to the third floor, whereas in China, it has dropped from the second floor to the first floor. This is the overall macroeconomic backdrop.

From the domestic standpoint, China faces challenges such as insufficient effective demand, overcapacity in some industries, weak social expectations, and low prices. In 2023, the CPI rose by 0.2 percent, notably lower than the increase of the previous year. International financial organizations such as the International Monetary Fund (IMF) and financial institutions in several markets have forecast that, with the sustained enhancement of domestic demand and changes in the external price situation, prices are expected to rise moderately in China in 2024.

I will turn to your second question, which is about the policy measures of the PBOC. We will strengthen both inter-temporal and counter-cyclical adjustments for the monetary policies to create a sound monetary and financial environment for economic growth and price stability. Our focus will center on three key aspects.

First, maintaining price stability and facilitating a moderate recovery in prices are important considerations for our monetary policy. We will stick to the aim of monetary policies, which is to maintain the stability of the value of the currency, and thereby promote economic growth.

Second, we will optimize the allocation of financial resources. We will guide financial institutions to assess risks scientifically, curtail financing support for industries with overcapacity, and meet reasonable consumer financing needs in a more targeted manner.

Third, we will strengthen the coordination between financial policies and other policies. This is a rather broad issue beyond the financial realm. It is imperative to leverage policy synergy to increase the income of residents, expand employment, improve the social security system, implement the strategy of consumption-driven growth in an in-depth way, support the expansion of domestic demand, and facilitate the alignment of supply and demand, so as to promote the virtuous circle of the economy. Thank you.

Economic Daily: China’s economic development faces challenges and opportunities, both currently and in the foreseeable future. Given this context, how does the PBOC determine the orientation of the monetary policy? Thank you.

Pan Gongsheng: I assume most journalists present here today may have the same question. This is a crucial matter of widespread interest.
In 2023, China’s economy witnessed a rapid and ongoing recovery and achieved solid progress in high-quality development as the country entered a new phase of COVID prevention and control. Recently, the National Bureau of Statistics has announced that China’s GDP maintained a high growth rate of 5.2 percent in 2023. Despite difficulties and challenges such as insufficient effective demand, overcapacity in some industries, weak social expectations and an uncertain external environment, there are still many favorable factors from the perspective of the PBOC. We need to examine these issues in a more comprehensive and holistic manner. In recent years, China has pursued a sound monetary policy in contrast to the aggressive approaches adopted by developed economies. It has also continuously improved its monetary policy adjustment and transmission mechanism, creating conditions for support economic development in a sustainable manner.

At present, there is ample space for China’s monetary policy. We will strike a balance between short-term and long-term perspectives, stabilizing economic growth and preventing risks, as well as internal and external equilibria, and enhance counter-cyclical and inter-temporal adjustments, thereby creating a favorable monetary and financial environment for economic growth. The PBOC will lower the RRR by 0.5 percentage points from February 5, injecting RMB1 trillion in long-term liquidity into the market. It will also cut the interest rate on central bank lending for rural development, the interest rate on central bank lending for MSBs, and the central bank discount rate by 0.25 percentage points, respectively, effective from tomorrow. In addition, the PBOC will guide the overall financing costs for the real economy to remain stable with a slight decline. Now, I will elaborate from four aspects.

First, we will maintain a reasonable growth in the aggregate. To achieve this, we will continue to leverage various tools such as the RRR, central bank lending and discounts, the medium-term lending facility (MLF), and open market operations (OMOs) to inject liquidity, so as to provide robust support for the reasonable growth of AFRE aggregate and of money and credit. At present, China has ample policy space compared to major economies in the world, with its average RRR standing at 7.4 percent. The RRR is an effective tool to replenish the MLT liquidity of the banking system. The new RRR cut of 0.5 percentage points, effective from February 5, is expected to provide the market with long-term liquidity of some RMB1 trillion.

Second, with regard to prices, particularly interest rate and exchange rate, we are committed to striking a balance between internal and external equilibria. In terms of interest rate, China will continue to pursue a monetary policy that focuses on domestic conditions. There is a gap between current prices and the target price level. As you may have noticed, major banks in China lowered their deposit rates in November and December last year. The PBOC will also reduce the interest rate on central bank lending for rural development and MSBs as well as the central bank discount rate from 2 percent to 1.75 percent, effective tomorrow. These measures will help bring down the loan prime rate (LPR), a key benchmark for loan pricing. Additionally, the market expectations for a shift in the Fed’s monetary policy provide us with more room to maneuver our monetary policy.

In terms of exchange rates, we will keep the RMB exchange rate flexible and give play to the role of the exchange rate in macroeconomic adjustment and as an automatic stabilizer for the balance of payments. We will ensure the market plays a decisive role in exchange rates, maintain bottom-line thinking, and expand our toolkit, so as to prevent the formation and self-reinforcement of one-sided and unanimous expectations and to keep the RMB exchange rate basically stable at an adaptive and equilibrium level.

Third, in terms of structure, our focus will be on enhancing efficiency. We will strike a balance between aggregate and structure, as well as between existing and new debts, and make significant efforts in the areas of technology finance, green finance, inclusive finance, ageing finance, and digital finance. We will expand the scope of inclusive MSB loans by extending the credit line from up to RMB10 million per borrower to up to RMB20 million, extend the term of inclusive MSB loan facilities and special central bank lending for inclusive elderly care, appropriately increase the quota for central bank lending to support rural development and MSBs as well as central bank discounts, and expand the coverage, supporting areas and scale of carbon emission reduction facility. In addition, we will explore and formulate a program to integrate tools that support sci-tech innovation and digital finance. Based on market principles and the rule of law, we will actively support debt restructuring and other measures in mobilizing financial resources that are inefficiently occupied and improving the efficiency of capital utilization.

Fourth, we will strengthen policy coordination to build a synergy. In comparison to other countries, the overall debt scale of Chinese government authorities, especially that of the central government, is moderate at present, leaving ample room for a proactive fiscal policy. In Q4 2023, the PBOC cooperated with the Ministry of Finance (MOF) to issue an additional RMB1 trillion in government bonds, most of which will be used in 2024 to spur investment and deliver concrete progress. Currently, the cost of issuing government bonds is low, and the proportion of residents holding such securities remains low, indicating untapped potential for government bond purchases. The monetary policy is well-positioned to keep liquidity adequate at a reasonable level, facilitate large-scale centralized issuance of government bonds and support the development of investment projects.

Thank you.

Cover News: How was the credit supply in 2023? What is the PBOC’s view on significant fluctuations observed in some quarters or months? Will the high growth continue in 2024? Thank you.

Pan Gongsheng: Deputy Governor Xuan Changneng is currently in charge of the Monetary Policy Department, and your question pertains to this domain. So I will give the floor to Deputy Governor Xuan.
 

Xuan Changneng, Deputy Governor of the PBOC: This issue is of great concern to market entities and friends from the press. Just now, Governor Pan Gongsheng touched upon the credit support for the real economy throughout the year in his opening remarks.

In 2023, the PBOC gave full play to the role of monetary policy in adjusting both the aggregate and the structure and guided financial institutions to increase credit support for the real economy, leading to steady and robust growth in credit aggregates. As of end-2023, outstanding RMB loans stood at RMB237.6 trillion, up 10.6 percent year on year. New RMB loans amounted to RMB22.7 trillion, increasing by RMB1.3 trillion year on year. The credit structure was continuously improved. As of end-2023, outstanding inclusive MSB loans saw a 23.5 percent year-on-year increase, and outstanding loans to “specialized, sophisticated, distinctive and innovative” enterprises and to technology-based SMEs rose by 18.6 percent and 21.9 percent, respectively. Outstanding MLT loans to the manufacturing sector grew by 31.9 percent year on year, among which MLT loans to the high-tech manufacturing sector went up 34 percent year on year, and outstanding MLT loans to the infrastructure sector increased by 15 percent year on year. These key areas and weak links all recorded growth rates notably higher than the 10.6 percent growth rate of total loans.

You mentioned the significant fluctuations in credit data observed in some quarters or months. According to the situation in previous years, Q1, especially January, typically witnesses an increase in new loans, while April, July and October tend to experience a reduction. This seasonal pattern is largely attributable to the dynamics of economic and financial operations. For instance, as “the plan for a year lies in spring”, various business entities tend to pursue a “good start”, major projects often commence at the beginning of the year, and preparations for spring plowing are underway during this period. All these, coupled with salary payments before the Spring Festival, contribute to a concentrated demand for financing. After entering a new phase of the COVID-19 containment, the pent-up demands for credit over the past three years were released intensively, resulting in a notable upswing in new loans in Q1 2023. In general, the economic recovery requires stable and sustained credit support. The key lies in managing the pace and intensity of credit supply. That is, we must respect objective laws while avoiding abnormal credit behaviors that deviate significantly from historical norms.

With regard to the credit situation in 2024, taking into account the banks’ inclination to see a business growth at the very beginning of the year and the sustained impact of policies introduced in H2 2023, it is expected that credit growth will remain high in Q1 2024. The PBOC will guide financial institutions to properly manage the pace of credit supply to ensure solid support for the real economy. It is expected that 2024 will see a more balanced trajectory of credit supply.

Finally, I would like to say that we should not over-interpret the fluctuations of the single-month credit data. Instead, we need to adopt a more diversified perspective. This involves examining the AFRE which has a broader coverage, and observing changes in financing costs from the perspective of prices, i.e., the interest rates. In this way, we can evaluate more reasonably the financial support for the real economy. Thank you.

YICAI: In recent years, it has been an important part of our financial work to forestall and defuse financial risks and firmly defend the bottom line whereby no systemic risks will occur. Could you talk about the PBOC’s considerations on forestalling financial risks, particularly systemic risks, given the current circumstances? Thank you.

Pan Gongsheng: Thank you. For the financial sector, risk prevention and control is an eternal theme. The central government attaches great importance to this matter and has made a series of systematic arrangements in this regard at the Central Economic Work Conference and the Central Financial Work Conference. In a recent special seminar for leading officials at the provincial and ministerial levels to promote high-quality financial development, General Secretary Xi Jinping reiterated the necessity of forestalling and defusing financial risks, with a specific focus on systemic risks. In accordance with the arrangements of the CPC Central Committee, I would like to share some insights into this topic from a macro perspective.

First, we should work to achieve a dynamic equilibrium among economic growth, economic restructuring and financial risk prevention at the macro level. The economy serves as the foundation of finance, and financial performance mirrors the operation of the economy. Many problems in economic operations are often manifested in the financial domain and intertwined with financial risks. Effectively preventing and controlling risks at their origin requires a balance between economic growth, economic restructuring and risk prevention, that is, a balance between development, reform and stability.

Second, we should strengthen financial regulation, improve the mechanism for financial risk prevention, early warning and resolution, and build a robust financial safety net. To be more specific: First, it is imperative to strengthen the corporate governance and risk management of financial institutions as they are the “first line of defense” against financial risks. Next, it is necessary to strengthen financial regulation and ensure the harmonious coordination between macro-prudential management, micro-prudential oversight and conduct supervision, so as to bring into play their respective roles while developing synergies. Furthermore, we need to promote the building of a financial safety net, improve the capacities for risk monitoring, assessment and early warning, enhance the mechanism for early corrections of financial risks with rigid constraints, establish an incentive-compatible accountability mechanism that aligns rights and responsibilities for risk resolution, make good use of industry protection funds and the Financial Stability Fund, and tap into the specialized risk resolution function of deposit insurance. Lastly, we need to strengthen legal protection for financial stability by accelerating the enactment of laws and regulations, such as the Financial Stability Law.

Third, we should resolve risks in key areas in an orderly manner to minimize financial risks on an overall basis. In recent years, a number of notable risks have been effectively resolved, contributing to the overall sound operation of financial institutions. Over the past year, various departments and local governments have taken effective measures to actively resolve risks associated with real estate and local government debts. Under the guidance of financial regulators, financial institutions have worked to keep financing channels stable for real estate companies, especially leading real estate developers. The PBOC and the National Administration of Financial Regulation (NAFR) will soon jointly issue policies aimed at improving commercial property loans to support high-quality real estate enterprises in their efforts to activate existing assets, expand the scope of capital utilization and enhance liquidity. Details will be released later today or tomorrow evening. The risks associated with local government debts are primarily a regional challenge, with those facing debt repayment difficulties mainly a few underdeveloped areas, and hence the impact on economic and financial aggregates is limited. I talked about this issue comprehensively at a meeting in Hong Kong at end-November last year. The PBOC will continue to cooperate with competent authorities and local governments to provide financial support for the mitigation of such risks.

Fourth, we should strike a balance between financial opening-up and security, and constantly improve financial risk prevention and control in the broader context of opening-up. Our efforts are focused on four aspects. Firstly, we have been promoting the orderly opening-up of financial services and financial markets and continuously facilitating cross-border trade and investment in recent years. Secondly, we are working to advance the reform of the RMB exchange rate formation mechanism and enhance the flexibility of the exchange rate, while strengthening macro-prudential management for cross-border capital flows to ensure the smooth operation of the foreign exchange market. Just now, Deputy Governor Zhu Hexin provided some specific interpretations. At present, the foreign exchange hedging ratio stands at about 25 percent, indicating a significant increase in enterprises’ awareness of exchange rate hedging. Meanwhile, RMB use accounts for around 25 percent in cross-border trade receipts and payments, reducing the risk of currency mismatch. These two “25 percent” are different, with the former for exchange rate hedging and the latter for the use of RMB. In addition, China’s foreign exchange market has demonstrated increased resilience in its operation, with market participants becoming more mature and regulators responding to market changes in a more composed and experienced manner. Thirdly, we are committed to promoting international financial cooperation, actively participating in international financial governance and strengthening multilateral and bilateral dialogue and communication at various levels. We have led the establishment of China-US and China-EU Financial Working Groups and endeavored to enhance macroeconomic policy coordination to collectively fortify the global financial safety net. Last week, the PBOC and the U.S. Department of the Treasury held the third meeting of the China-US Financial Working Group, with Deputy Governor Xuan Changneng chairing the Chinese side. Fourthly, we will continue to improve the management measures for data security in the financial sector to ensure that cross-border data flow is safer and more convenient, with clearer rules.

Moving forward, the PBOC will resolutely implement the arrangements of the CPC Central Committee on forestalling and defusing financial risks, maintain a system concept and bottom-line thinking, and firmly defend the bottom line whereby no systemic risks will occur. These are the four aspects I’d like to share from a macroscopic perspective. Thank you.

Market News International: In 2023, the RMB experienced a depreciation against the USD. How does the PBOC view the outlook for the RMB exchange rate in 2024? What factors may affect the exchange rate? Thank you.

Pan Gongsheng: Thank you for your questions. These questions are related to the topics we’ve addressed today.

Last year, the onshore and offshore RMB exchange rates against the USD experienced a depreciation of 2 percent and 2.5 percent respectively, and the emerging market currency index fell by 3.8 percent. Looking at neighboring currencies, the Yen depreciated by 7.3 percent and the KRW fell by 2.7 percent. This broader perspective provides a more comprehensive overview of the changes in the RMB exchange rate over the last year. Various factors, including economic growth, monetary policy, financial market, geopolitical climate and risk events, contribute to fluctuations in the exchange rate in the short term. However, MLT trends are fundamentally driven by economic fundamentals. Looking ahead to 2024, we expect that the RMB exchange rate will remain basically stable at an adaptive and equilibrium level.

There are several factors that underpin the stability of the RMB exchange rate.

The first is China’s robust economic performance. The country’s economy has good and stable fundamentals and maintains a long-term growth trend, which is an important foundation for the basic stability of the RMB exchange rate.

The second is changes in the international financial environment. As mentioned earlier, the general consensus in the market is that there will be a shift in the Fed’s monetary policy and that the momentum of the US dollar appreciation is weakening. Consequently, the mismatch of the monetary policy cycle between China and the US is expected to be alleviated, helping narrow the interest rate spread between the two countries and making the RMB exchange rate and cross-border capital flow more stable and balanced.

The third is the high investment and hedging value of RMB assets. With the further opening-up of China’s financial markets, RMB bonds, as one of the few financial markets in the world with stable prices, have emerged as an attractive option for overseas investors. Since September last year, China’s RMB bond market has witnessed a net inflow for four consecutive months, leading to an increase of nearly RMB500 billion in the volume of domestic bonds held by overseas investors.

The fourth is a more solid micro-foundation for the stability of the exchange rate. The balance of payments has maintained a basic equilibrium, and the ratio of the current account balance to GDP has remained within a reasonable range, standing at 1.6 percent for the first three quarters of 2023. Cross-border trade, investment and financing have been further facilitated and cross-border capital flows have been balanced in both directions. The foreign exchange market has become more resilient and market participants have become more mature. Reflecting on my tenure as Administrator of the SAFE since 2015, I have observed that China’s foreign exchange market has become far more mature compared to what it was eight years ago. Furthermore, the exchange rate hedging tools have been more widely used, the RMB has been further internationalized, and business entities have become better able to cope with external shocks and exchange rate fluctuations.

At the Central Economic Work Conference and the Central Financial Work Conference, emphasis was placed on the importance of keeping the RMB exchange rate basically stable at an adaptive and equilibrium level. Historical practice has repeatedly proved that the PBOC and the SAFE, serving as regulators of the foreign exchange market, have the experience, capability and confidence to address various shocks and challenges and maintain the smooth functioning of China’s foreign exchange market.

Going forward, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, the PBOC and the SAFE will adhere to the principle that the exchange rate is mainly determined by market supply and demand, keep the RMB exchange rate flexible, and give play to the role of the exchange rate as an automatic stabilizer for adjusting macro economy and the balance of payments. In the meantime, we will maintain bottom-line thinking, expand our toolkit and guard against the risk of exchange rate overshooting, so as to prevent the formation and self-reinforcement of one-sided and unanimous expectations.

Aside from the foreign exchange and bond markets, the stock market, as another integral component of the financial market, is also of widespread concern. Just now, I shared some of my views on the future trend of the foreign exchange market, and now, I would like to say a few words about the capital market.

The CPC Central Committee and the State Council are highly concerned about the stability and development of the capital market. On January 22, the State Council executive meeting made special research and arrangements in this regard. At present, China’s macro economy continues to pick up, leaving ample room for maneuvering macro policies and providing a solid foundation for the stable and healthy development of the capital market. The PBOC will work conscientiously to implement the guidelines of the State Council executive meeting, intensify the counter-cyclical and inter-temporal adjustments of monetary policy, and focus on stabilizing the market and boosting confidence to consolidate and strengthen the upward trend of economic recovery, so as to create a favorable monetary and financial environment for the smooth operation of the financial markets, including the capital market.

Thank you.

Financial Times: Currently, the net interest rate spreads are gradually narrowing for domestic banks. We have also observed that the LPR has remained unchanged recently. How will the PBOC guide commercial banks to make solid headway in asset-liability management, thus bringing down the overall financing costs for the real economy? Thank you.

Xuan Changneng: Thank you for your question. This question has just been covered by Governor Pan in his answer to a related question, especially as he announced the relevant policy measures that we are going to launch in the near future. Here, I would like to present again in general terms what the PBOC has done in this regard in 2023 and its policy orientation for the next stage.

In 2023, the PBOC effectively implemented a series of interest rate policies, promoting a significant decline in the overall financing costs for the real economy. As Governor Pan mentioned just now, the first is to cut the policy rate twice. In June and August last year, the OMO reverse repo rate and MLF rate decreased by a total of 0.2 and 0.25 percentage points respectively, bringing down the LPR on an ongoing basis. The second is to adjust and optimize housing credit policies. The PBOC continued to implement the mechanism that allows dynamic adjustments to first-home mortgage rate policies, and lowered the floor on second-home mortgage rates by 40 basis points in a timely manner at end-August, thus guiding banks to reduce the interest rates on existing first-home mortgage loans. The third is to further promote the market-oriented pricing of deposit rates. Based on the rapid growth of residents’ saving deposits and a significant decrease in lending rates, major banks lowered their deposit rates three times, with an even larger decline in the MLT deposit rates.

Overall, the above measures have boosted a marked decline in the financing costs for businesses and the consumer credit costs for individuals. In 2023, the weighted average interest rate on corporate loans stood at 3.88 percent, down 0.29 percentage points year on year, continuously hitting a record low. The existing home loans exceeding RMB23 trillion saw an average decrease of 0.73 percentage points in their interest rates, helping reduce the interest expenses for mortgage borrowers by about RMB170 billion per year. The overall decline in interest rates effectively eased the interest burden on enterprises and residents, helping to stimulate the demand for loans, optimize the allocation of financial resources, and better smooth domestic economic circulation.

As Governor Pan mentioned just now, the PBOC will cut the interest rates on central bank lending for rural development and MSBs and central bank discounts, and domestic banks have also moderately lowered their deposit rates, which are conducive to bringing down the overall financing costs for the real economy. Going forward, the PBOC will continue to make interest rate policies better targeted and coordinated by means of reform, focus on domestic conditions and strike a balance between internal and external equilibria, and further leverage the positive role of interest rate policies in boosting consumption, stabilizing investment and expanding domestic demand. Our efforts include the following aspects:

First, we will keep the interest rate at a proper level, and continue to manage the real interest rate level in a forward-looking manner based on our judgment on the future trend of price changes, aiming to keep the interest rate in line with the requirements for achieving potential economic growth.

Second, we will comprehensively take into account the price relations between deposit rate, the rate of return on wealth management products and dividend yield, give full play to the role of the mechanism for market-oriented adjustments of deposit rates, support banks in reducing their liability costs, and maintain a reasonable and orderly market competition environment, thus creating conditions for lowering lending rates.

Third, we will encourage banks to sell more government bonds to residents. It will not only provide residents with more safe, liquid and profitable investment products, but also further smooth diversified channels for turning savings deposits into investment.

Fourth, on the premise that banks provide sustainable support for the real economy and the risks are controllable, we will improve the LPR formation mechanism and urge quotation banks to improve the quality of their quotations. At the same time, we will strengthen the monitoring and self-regulation of lending rates to prevent enterprises’ funds from simply circulating in the financial sector or being used for arbitrage.

Fifth, we will implement the mechanism that allows dynamic adjustments to first-home mortgage rate policies, cooperate with the city governments to adjust the floor on mortgage rates in line with the city-specific policy, and optimize the interest rate relationship among home loans, consumer loans, business loans and other personal loans, thereby supporting the stable and sound development of the real estate market.

In addition, the PBOC will continue to work with relevant departments to clean up and correct banks’ unreasonable charges for enterprise-related services, hence effectively reducing enterprises’ overall financing costs for the real economy.

CCTV: In response to the proposal of the CPC Central Committee for accelerating efforts to build up China’s strength in finance, what does the PBOC plan to do? Thank you.

Pan Gongsheng: Thank you for your question. Let me answer this question briefly. Since the 18th CPC National Congress, China has made significant progress in the reform and development of its financial system. The construction of modern financial regulation system, financial supervision system, financial institution system, financial products and services system, and financial infrastructure system was advanced on an ongoing basis, and the ability of the financial sector to serve the real economy and prevent and control risks was significantly enhanced. With the rise of China’s political and economic status, the global influence of the PBOC and the internationalization of the RMB have been greatly improved. All these factors have laid a good foundation for building up China’s strength in finance.

At present, in terms of size, China’s banking assets rank first in the world, its bond market ranks second in the world, and its foreign exchange reserves rank first in the world for 19 consecutive years. The development of digital finance, green finance and inclusive finance ranks among the world’s top tier. The weight of the RMB in the IMF Special Drawing Right (SDR) basket ranks third, and RMB is used as a reserve currency by more than 80 countries and economies.

Building China into a financial powerhouse is a long-term goal and a systematic project. It requires adherence to market principles and the rule of law as well as the fundamental philosophy of internationalization, and it also requires long-term and persistent efforts. We should adhere to the path of reform toward the socialist market economy, and continuously enhance and improve the function of the financial market in allocating resources. We will continue to improve the rule of law in the financial sector and make financial systems and policies more transparent, stable and predictable. We will advance in-depth financial reform and high-level financial opening-up in a coordinated manner, continue to promote the opening-up of the financial service sector and financial market, further facilitate trade, investment and financing, and strengthen the efforts to develop financial security capacity that is in line with the level of opening-up.

General Secretary Xi Jinping pointed out that a financial powerhouse should be equipped with “six core financial elements”, emphasizing that it should have a strong currency and a strong central bank. Currency is the foundation of a financial system as well as a symbol of overall national strength, international competitiveness and macro governance capacity. A strong currency can better fulfill its functions as a measure of value, a means of circulation, a means of payment and a means of storage, boost the confidence of currency holders, meet the needs of opening-up and cross-border investment and financing, and provide a favorable monetary and financial environment for the healthy development of the national economy.

We will be more devoted to achieving the “dual goals” with the support of “dual pillars”, that is, to achieving the dual goals of currency stability and financial stability by improving the dual-pillar regulation framework underpinned by monetary policy and macro-prudential policy. We will accelerate the development of a modern central banking system centering on the responsibilities of monetary policy, systemic financial risk prevention and control, financial stability and national financial security, international financial governance and cooperation, financial markets, financial infrastructure construction, and financial management and services. We will continue to deepen the supply-side structural reform of the financial sector, optimize the structure and layout of the financial institution system and financial market, and accelerate the building of a modern financial system with Chinese characteristics.

At the same time, the PBOC also assumes important responsibilities in such key tasks as building strong financial institutions, international financial centers, financial regulatory systems and financial talent teams. We will uphold the centralized and unified leadership of the CPC Central Committee over the financial work, deeply understand the political and people-oriented nature of financial work, and remain committed to the path of financial development with Chinese characteristics. We will work to make solid progress in all tasks, continue to promote high-quality financial development, and vigorously promote the building of a financial powerhouse. Thank you.

21st Century Business Herald: Currently, MSBs are experiencing an uneven economic recovery. In terms of financial support for private enterprises, what further measures can be taken to better stimulate the development of business entities? Thank you.

Zhu Hexin: Thank you for your question. Just now, Governor Pan announced to you two important measures, which will directly benefit the development of our private economy. Supporting the development of the private economy is a long-pursued policy of the CPC Central Committee. The private economy is an important part of China’s economic system, as it is extensive in scope and large in volume and involves all aspects of the national economy and the people’s livelihood. Therefore, we should go all out to support its development. The private economy has played a very important role in stabilizing growth, improving the people’s livelihood, encouraging business startups and increasing job opportunities. When discussing the role and status of the private economy in China, people often refer to the “Five-Six-Seven-Eight-Nine” phenomenon (meaning it contributes more than 50 percent of tax revenue, over 60 percent of GDP, more than 70 percent of technological innovation achievements, over 80 percent of urban employment, and more than 90 percent of the number of enterprises), which shows that the private economy is very important.

While delivering financial services to support the real economy, the private economy is one of the key areas of our concern, so the PBOC has done a lot of work in this regard, which proves to be fruitful. In line with the guidelines and requirements of the CPC Central Committee, we have always worked unswervingly to consolidate and develop the public sector and to encourage, support and guide the development of the non-public sector, regarding the private economy as our own family members and treating private and state-owned enterprises equally. At the same time, putting theories into practice is also crucial. Thus, how to better implement our financial policies through financial institutions? The most critical thing is to apply the measures for the private economy with all efforts, thus making the private economy our important production pole and significant power source. We have achieved great results in this regard. Previously, people often talked about financing difficulties and high financing costs faced by MSBs. In fact, great achievements have been made in recent years with regard to these problems, and we can use a set of data to illustrate it. At end-2023, outstanding loans to private-holding enterprises exceeded RMB41.2 trillion, an increase of RMB3.8 trillion for the whole year, or RMB950 billion more than the increase at end-2022. The loans supported 7.16 million enterprises, an increase of 1.16 million for the whole year, 80,000 more than the increase of the previous year. In November, the weighted average interest rate on newly-issued loans to private-holding enterprises stood at 4.24 percent, 23 basis points lower than that of the same period last year.

As you have noticed, the Central Financial Work Conference proposed to make significant efforts in the areas of technology finance, green finance, inclusive finance, pension finance, and digital finance, which are closely related to the private economy and enterprises, so we should pay more attention to providing financial support for the development of the private economy while putting this proposal into practice. The PBOC has made great efforts in the following aspects and will continue to do so:

First, enhancing the guiding role of policy incentives. We have improved our policy tools on an ongoing basis. First of all, the PBOC made important announcements and launched two major measures, which are part of our policy toolkit. So who should put them into practice? The answer is financial institutions. Then what should the financial institutions do? The answer is to make every effort to promote the implementation of related policies, and link the demands of financial institutions with the aspects that need to be supported in the development of the private economy, such as the mechanism ensuring that those who have fulfilled their duties shall not be held accountable and performance appraisal. Effectively combining these aspects will help our policy tools play a greater role.

Second, developing capacities for providing financial services, mainly targeted for financial institutions. Currently, through technology empowerment and the connectivity of information islands, we can address some blind spots in supporting the private economy and enterprises. For some areas that seek support from our financial institutions, such as credit loans and first-time loans, their demands can be satisfied through technology empowerment and information sharing.

Third, ensuring a diversified supply of funds. The PBOC has done a lot in this regard. We provided support through both the traditional credit channels and the direct financing markets such as bond market. Of course, there are still some technology-based enterprises that need to be supported through the capital market. Meanwhile, as we all know, a large number of private enterprises are technology-based, and the PBOC attaches great importance to them. We have increased loans to them and expanded the issuance of sci-tech innovation bills, thus supporting private enterprises in increasing their investment in science and technology and deepening research and development. At the same time, we worked with relevant enterprises and departments to ensure the smooth functioning of capital raising, investment, management and exit for the venture capital industry, thereby providing high-quality services for the development of private sci-tech enterprises at the start-up stage. Overall, the private economy and enterprises are very important and the financial institutions and enterprises should play a greater role. Thank you.

Shou Xiaoli: For the sake of time, one more question only.

Phoenix TV: What progress has the PBOC made in promoting the high-level opening-up of the Chinese mainland’s financial sector to Hong Kong in recent years? In addition, what new measures has the PBOC taken recently to promote financial cooperation between the two regions and better integrate Hong Kong into China’s overall development? Thank you.

Pan Gongsheng: Thank you for your questions. Over the past few years, almost each year has witnessed the launch of major projects jointly promoted by the PBOC and institutions in Hong Kong. Expanding the high-level opening-up is a fundamental national policy of China. Hong Kong is one of the major international financial hubs, the world’s largest offshore RMB market, and the most important asset and private wealth management center in Asia. The PBOC has always supported the construction of Hong Kong’s offshore RMB center, pushed forward the high-level opening-up of the Chinese mainland’s financial sector to Hong Kong, firmly upheld Hong Kong’s role as an international financial center, and maintained its long-term prosperity and stability.

In recent years, the PBOC, together with the mainland financial regulators, has launched and continuously optimized the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect, Cross-boundary Wealth Management Connect, and Swap Connect, making it more convenient for overseas investors to purchase mainland stocks and bonds through Hong Kong and for Hong Kong citizens to purchase mainland wealth management products.

To further promote the high-level opening-up of the Chinese mainland’s financial sector, deepen financial cooperation between the Mainland and Hong Kong, and consolidate and upgrade Hong Kong’s position as an international financial center, the PBOC and the Hong Kong Monetary Authority (HKMA) decided to launch six policy measures based on full preparation in the early stage. Next, I would like to invite Deputy Governor Xuan Changneng, who is in charge of international business at the PBOC, to introduce these six measures.

Xuan Changneng: I would like to introduce the six measures for deepening financial cooperation between Hong Kong and the Mainland. The PBOC and the HKMA has decided to launch six financial measures, covering financial market connectivity, cross-border capital facilitation and financial cooperation deepening.

To be specific, the first is to include Bond Connect bonds in the list of eligible collateral for the Renminbi Liquidity Arrangement (RMBLA) of HKMA. The second is to further open up the onshore bond repo market to overseas institutional investors (including Bond Connect investors) that already have access to the China Interbank Bond Market. The third is to issue detailed implementation rules for enhancing the pilot scheme of Cross-boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), thus expanding and facilitating individual investment channels in the GBA. The fourth is to implement payment facilitation policies for Hong Kong and Macao residents to purchase a house in the GBA, thereby better meeting the housing needs of Hong Kong and Macao residents. The fifth is to expand the pilot scope of cross-border credit reference cooperation between Shenzhen and Hong Kong to facilitate cross-border financing for Shenzhen and Hong Kong enterprises. The sixth is to deepen the cross-border pilot of e-CNY to provide more convenience for residents and enterprises in both Hong Kong and the Mainland.

Moving forward, the PBOC will work closely with the financial regulators of the Mainland and Hong Kong to jointly promote the implementation of various policy measures, further optimize financial services, strengthen financial cooperation, and boost further development of Hong Kong as an international financial center. Thank you.

Pan Gongsheng: At the early stage, working with relevant financial regulators in the Mainland and the HKMA, the PBOC has made a lot of preparations for these policy measures just announced by Deputy Governor Xuan. The policy papers about some measures will be released by the PBOC, the HKMA and other relevant authorities this evening.

The Chinese New Year is less than 20 days away, and I would like to wish all of you from the media and your families a happy and healthy new year! Thank you.

Shou Xiaoli: Thanks to our speakers and friends from the press. That’s all for today’s press conference.