PBOC to steer more credit toward China's service sector
The central bank plans to expand credit support for services rather than broaden overall lending
Published
The People's Bank of China plans to boost credit aid and direct more financial resources toward the service sector.
The move continues a shift the central bank signalled earlier this year. In January it said it would keep monetary policy moderately loose while using refinancing tools aimed at services consumption and elderly care to steer more credit into those areas, according to China's State Council government portal. The PBOC has previously run structural lending facilities supporting bank loans to elderly care and domestic service consumption, as well as a separate facility for sci-tech innovation funding, according to analysis published by the Centre for Economic Policy Research.
The central bank has also eased broader policy this year. In May it cut the seven-day reverse repo rate from 1.5% to 1.4%, lowered the reserve requirement ratio by 50 basis points, and cut Housing Provident Fund loan rates, according to the Centre for Economic Policy Research.
The latest step points to a central bank favouring targeted credit over another broad expansion. Aggregate financing and new loans have been running below expectations through August, and by narrowing its focus to services the PBOC appears to be prioritising where credit goes rather than how much of it flows, leaving its overall cautious policy stance largely unchanged.