The 2022 Work Conference of the People’s Bank of China (PBC) was held in virtual format on the morning of December 27, 2021. Under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the conference thoroughly studied and implemented the guidelines of the Sixth Plenary Session of the 19th Central Committee of the Communist Party of China (CPC) and the Central Economic Work Conference, reviewed the PBC’s main work in 2021, analyzed current situations and made arrangements for the work in 2022. Governor Yi Gang and Secretary of the CPC PBC Committee Guo Shuqing attended and addressed the conference. Also attending the conference were members of the CPC PBC Committee and Deputy Governors Chen Yulu, Pan Gongsheng, Fan Yifei, Liu Guiping and Liu Guoqiang, as well as Xu Jiaai, member of the CPC PBC Committee and head of the Discipline Inspection and Supervision Group dispatched to the PBC by the Central Commission for Discipline Inspection and the National Supervision Commission.

It was noted at the conference that, in 2021, the PBC has resolutely implemented the decisions and arrangements made by the CPC Central Committee and the State Council and practiced the new development philosophy fully, faithfully, and comprehensively. It has consistently implemented the sound monetary policy, extended all-out support to help businesses get out of difficulties, taken innovative measures to advance green development, effectively prevented and controlled financial risks, while further deepening the reform and opening-up in the financial sector. Positive results were achieved in all aspects.

First, the PBC has continued to implement a sound monetary policy that was flexible, targeted, reasonable and appropriate. Employing a mix of monetary policy tools, the PBC has maintained the aggregate liquidity adequate at a reasonable level, and the short-, medium- and long-term liquidity demand and supply were generally balanced. Through two required reserve ratio (RRR) cuts, the PBC released about RMB2.2 trillion of long-term funds. In addition, it guided the 1-year loan prime rate (LPR) to go down by five basis points and lowered the central bank lending rate in support of agriculture and small businesses by 0.25 percentage points. It has kept the growth of broad money supply (M2) and aggregate financing to the real economy (AFRE) generally in line with nominal GDP growth, and maintained the RMB exchange rate basically stable at an adaptive and equilibrium level under complicated circumstances.

Second, the PBC has improved the quality and efficiency of financial services for the real economy. In specific, the PBC increased central bank lending in support of small businesses by RMB300 billion, continued to implement the two monetary policy tools which directly support the real economy, and reasonably extended the effective periods of both tools. At end-November 2021, outstanding inclusive loans to micro and small businesses (MSBs) stood at RMB18.9 trillion, up 26.4 percent year on year. The PBC rolled out an instrument to support carbon emission reduction and set up special central bank lending for clean and efficient coal use. It also strengthened the guidance, supervision, and assessment on the credit policies for manufacturing. At end-November, outstanding medium and long-term (MLT) manufacturing loans increased by 33.8 percent from the previous year. Moreover, stepped-up financial support for key areas and the national strategies for regional development was extended, with RMB200 billion worth of central bank lending issued to support coordinated regional development.

Third, the PBC has achieved new progress in forestalling and defusing financial risks. The PBC prudently pressed ahead with the risk resolution of key groups and large-sized enterprises. Because of its continuous effort to reduce risks of existing high-risk institutions, the number of such institutions decreased markedly. The PBC also resolutely combated monopoly, prevented the disorderly expansion of capital, and incorporated all types of financial businesses into supervision. It officially released the list of China’s systemically important banks (SIBs), unveiled and practiced the Additional Regulatory Provisions on SIBs. The PBC accepted the applications for establishing financial holding companies (FHCs) in accordance with laws, and formulated the Administrative Measures on the Total Loss-absorbing Capacity of Global Systemically Important Banks for implementation. With the generally declining financial risks and the market-oriented and law-based risk resolution methods, market expectations grew more stable.

Fourth, the PBC has proactively enhanced international cooperation and opening-up in the financial sector. Notably, the PBC carried out international cooperation in green finance in an orderly manner, took the lead in developing the G20 Sustainable Finance Roadmap, the G20’s first framework for sustainable finance, and made progress in harmonizing the green taxonomy standards between China and the EU. Moreover, the PBC played an active role in multilateral crisis prevention and rescue efforts as well as debt coordination, and fully involved itself in promoting the implementation of the Regional Comprehensive Economic Partnership (RCEP).

Fifth, the PBC has made new progress in the financial reform. The Office of the Financial Stability and Development Committee (FSDC) has earnestly performed its duties. The role of deposit insurance in early correction achieved significant results. The financial sector also saw the launch of the Cross-border Wealth Management Connect (WMC) pilot scheme, and the Southbound Trading under Bond Connect as well as the inclusion of China’s government bonds into the three major global bond indexes. On top of these, the policies for cross-border RMB use were continuously optimized, with the reform in key areas of foreign exchange further deepened. The foreign exchange reserves remained generally safe and stable in volume.

Sixth, the PBC has continuously improved financial services and financial management. The PBC reinforced coordination on the legislation in the financial sector, made marked achievements in the integrated statistics for the financial sector, and advanced the formulation of the financial development plan for the 14th Five-Year Plan period in an orderly manner. Payment services for MSBs and self-employed businesses significantly improved, and the building of payment service environment for the forthcoming Winter Olympic Games sped up. The construction of next-generation information infrastructures made breakthroughs, and the white paper on the progress of e-CNY research and development was published. The electronization of cross-province tax payment and the electronic payment of parcel import tax to the treasury were further promoted. The PBC released the Measures for Administration of Credit Reporting Businesses and the Measures for the Supervision of Anti-Money Laundering and Counter-Terrorist Financing of Financial Institutions, and thoroughly conducted the implementation measures for the protection of financial consumer rights. In addition, the PBC made improvements in senior advisers’ work, internal auditing and supervision, logistics, security, centralized procurement and services for the retired and deepened the reforms of affiliated enterprises and public institutions.

It was required at the conference that in 2022, under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the PBC should comprehensively implement the guidelines of the 19th CPC National Congress, plenary sessions of the 19th CPC Central Committee, and the Central Economic Work Conference, adhere to the underlying principle of pursuing progress while ensuring stability, and practice the new development philosophy fully, faithfully and comprehensively. The PBC should also accelerate the building of a new development paradigm, deepen financial reform and opening-up on all fronts, pursue innovation-driven development and promote high-quality development.

First, the PBC will pursue a sound monetary policy that is flexible and appropriate. Using multiple monetary policy tools, it will keep the liquidity adequate at a reasonable level, ensure a stable growth of aggregate credit, increase support for the real economy, and keep the growth of money supply (M2) and the aggregate financing to the real economy (AFRE) generally in line with nominal GDP growth. The PBC will improve the mechanism for the formation and transmission of market-based interest rates, steadily bring down the overall financing costs for businesses, and encourage the financial system to cut profits in favor of the real economy. It will enhance the flexibility of the RMB exchange rate, and keep the exchange rate basically stable at an adaptive and equilibrium level.

Second, the PBC will step up financial support for key areas in a targeted way. It will ensure a smooth transition of the tool for inclusive MBS loans and the scheme for unsecured inclusive MBS loans. The system encouraging financial support for sci-tech innovation will be improved. Based on a correct understanding of peaking carbon emissions and achieving carbon neutrality, the PBC will push ahead with the development of green finance in a coordinated way. Meanwhile, it will continuously enhance the capacity and effectiveness of the financial sector in supporting rural revitalization.

Third, the PBC will further improve the policy framework and governance mechanism for macroprudential management. It will improve the framework for monitoring and evaluating systemic risks and conduct macroprudential stress tests. It will push ahead with the approval of financial holding companies in a steady manner, and perform sustained supervision thereof. Additional regulation for SIBs will be implemented.

Fourth, the PBC will continue to forestall and defuse financial risks. Based on the guiding principles of maintaining overall stability, taking a coordinated approach with differentiated measures and defusing bombs precisely, the PBC will address and defuse risks of key institutions in a steady and orderly manner, and give play to the roles of the deposit insurance system and industry protection funds in risk resolution. Attaching equal importance to regulation and development, it will strengthen the regulation on capital and platform companies according to the law, and push ahead with the rectification of the leading internet financial platforms. The prudential management of real estate finance will be practiced to better meet the rational housing demands of homebuyers, thereby fostering a virtuous cycle for the healthy development of the real estate sector.

Fifth, the PBC will continue to deepen international financial cooperation. It will be proactive in promoting international cooperation on green finance, and it will properly handle the debt problems of low-income countries with the multilateral debt coordination mechanism. It will push forward the opening-up of the financial sector, and facilitate a higher-level opening-up based on negative lists. Meanwhile, it will promote capital account convertibility.

Sixth, the PBC will continue to deepen financial reform. It will launch measures for regulating financial infrastructures, and steadily advance the reform and opening-up of the bond market. It will further improve the management systems for the money market, the commercial paper market, the gold market, and the derivatives market. It will ensure sound implementation of the deposit insurance system and support relevant authorities and local governments in promoting reforms of rural credit cooperatives based on their categories and local conditions. The PBC will steadily promote the RMB internationalization, reinforce support for the development of Hong Kong as an offshore RMB center, and promote sound development of the offshore RMB market.

Seventh, the PBC will further improve foreign exchange management and services. The pilot program of trade facilitation will witness expansion in size and improvement in quality. Pilot programs for high-level opening-up of cross-border trade and investment are to be rolled out. The PBC will advance the reform of external debt registration and management, and improve the diversified use of foreign exchange reserves.

Eighth, the PBC will comprehensively improve financial services and management. It will advance the development of financial laws and regulations system in a coordinated manner, and complete the formulation of the Financial Development Plan in the 14th Five-Year Plan Period. It will continuously advance the pilot regional financial reforms and strengthen the comprehensive statistical monitoring and analysis of the financial sector. It will continue to crack down on cross-border gambling, telecommunication and cyber frauds and illegal payments. Promoting Fintech application and management, the PBC will advance the R&D and pilot use of e-CNY in a steady and orderly manner. The treasury will be better used for the people’s livelihood. The Measures for the Administration of Credit Reporting Business will be implemented. The unified registration and publicity system for financing secured by chattels and the receivables financing service platform will play an enhanced role. In addition, the PBC will advance the anti-money laundering of designated non-financial business and professions (DNFBP). The opinions on advancing the high-quality development of the inclusive finance will be implemented.

It was emphasized at the conference that in 2022, the PBC should be more proactive and assume heavy duties, and it should implement the decisions and arrangements of the CPC Central Committee and the State Council to get ready for the convening of the 20th CPC National Congress with outstanding achievements.