BEIJING, Aug 2 - The People’s Bank of China (PBOC) said on Sunday it would adjust monetary policy instruments in a timely fashion and take steps to encourage issuance of yuan-denominated panda bonds, according to a readout of a work meeting held to plan policy for the second half of the year.
The PBOC reiterated its intention to pursue an appropriately loose monetary stance and to keep liquidity plentiful. The statement outlined several priorities, including steadily advancing the higher-level opening of China’s financial market, promoting cooperation on infrastructure projects both domestically and internationally, and broadening the set of tools for liquidity management and risk hedging.
On local government financing vehicles, the central bank said it would continue to provide financial support for resolving debt risks and to push for their market-oriented transformation. The bank added it would support more foreign institutions in issuing panda bonds, assist Shanghai in strengthening cross-border and offshore financial services, and consolidate Hong Kong’s role as an offshore yuan hub.
The work meeting was chaired by PBOC Governor Pan Gongsheng. It came after the Communist Party’s Politburo urged faster fiscal spending this week on infrastructure projects that have already been budgeted for the remainder of the year. A summary of the Politburo discussion acknowledged the "difficulties and challenges facing the economy" and called for accelerating fiscal expenditure while making monetary policy more flexible and forward-looking.
The policy signals arrive against a backdrop of slowing growth: data released last month showed China’s economy expanded 4.3% in the second quarter, the slowest pace in more than three years and short of the lower bound of the government’s full-year target range of 4.5% to 5.0%.
This set of commitments frames the PBOC’s near-term approach as one focused on liquidity support, targeted risk resolution and measures to deepen financial market openness, while aligning with recent Party-level direction to accelerate fiscal implementation of already planned infrastructure projects.