PBOC: China to prioritize policy stability, avoid sudden shift
Updated 22:12, 15-Jan-2021
The People's Bank of China in Beijing, December 24, 2020. /CFP

The People's Bank of China in Beijing, December 24, 2020. /CFP

China's prudent monetary policy will be more flexible, targeted and adequate in 2021, said Chen Yulu, deputy governor at the People's Bank of China (PBOC) on Friday, adding that the central bank will prioritize policy stability and avoid making sudden shift in the year ahead.

China's monetary policy will provide necessary support for the country's economic recovery from the COVID-19 pandemic, Chen told a press conference.

Chen said the country's effort in curbing financial risks achieved important results in 2020, with peer-to-peer (P2P) online lending institutions dropping to zero. The number dropped from a peak of more than 5,000 in 2017 after China's multi-year effort to crack down on the risky financial business.

"The number of P2P online lending institutions dropped to zero, various high-risk financial institutions have been dealt with in an orderly manner, the scale of shadow banking has been reduced," said Chen.

Read more: Review of 2020: China intensifies regulations on internet business

He also touched on Ant Group in the briefing, saying the central bank is working with the group in making sure its financial activities meet regulatory standards. "Ant Group has set up a rectification work group, and is stepping up to formulate a timetable for rectification," said Chen.

As Ant Group works on rectifying its business, he said it should maintain business continuity and ensure the quality of financial services to the public.

Chen added that the financial management department is maintaining close supervisory communication with the company, and relevant work progress will be released in due time.

China stepped up regulatory oversight on the country's fintech sector in 2020, with regulators vowing to include fintech in the scope of unified regulation for financial activities. The country published interim measures for supervising online small lending two days before Ant's scheduled dual listing in Hong Kong and Shanghai in November, which effectively halted its jumbo listing. Since then, the group has vowed to implement comprehensive risk management in all its business.

New loans

China was close to achieving its credit growth target of 20 trillion yuan for 2020. The world's second-largest economy reported a total of over 19.63 trillion yuan ($3.03 trillion) in new loans for the year, up 16.8 percent from 2019.

The PBOC said that medium- and long-term loans to the manufacturing sector rose by over 35 percent in 2020. For small and micro-businesses, loans increased by over 30 percent last year.

"The interest rate of newly issued loans to small and micro businesses in December was 5.08 percent, down 0.8 percentage points from the same month last year. In 2020, China supported a total of over 32 million business entities, up by over 5 million than the previous year," said Chen.

(CGTN's Gao Ang contributed to this story.)

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