PBoC expands ‘structural monetary policy tools’

The Chinese central bank last week announced liquidity injections into specific sectors hit by Covid-19. 

The People’s Bank of China said on May 6 it will launch a 100 billion yuan ($15 billion) relending facility to support the transport, logistics and storage sectors. It outlined the use of the “structural monetary policy tools” in a research paper. 

On May 3, the PBoC said it had allocated an additional 100 billion yuan of loans to coal production and storage, Reuters reported. 

The PBoC said lending in the financial system increased by over 425 billion yuan year-on-year in Q1 2022, to a total of 8.3 trillion yuan. 

Outstanding relending and rediscount loans reached almost 2.5 trillion yuan at the end of March, up 526.3 billion yuan year-on-year. 

Most recently, on May 8, the Chinese central bank encouraged lending to “whitelisted” companies, following 37 days of lockdown in Shanghai. 

“The PBoC is encouraging financial institutions to better use the additional liquidity to extend loans to those companies,” said Yu Wenjian, the PBoC’s director of financial consumer protection, the South China Morning Post reported. 

Cuts to banks’ reserve requirement ratio on April 25 released an estimated 530 billion yuan in liquidity.