China maintains steady credit growth in Q3 to support the economy

China's central bank maintained a steady growth of credit in the third quarter of 2023 to support the real economy, according to a report released on Monday.

The People's Bank of China (PBOC) is using a variety of tools to keep liquidity flowing, lower borrowing costs, and improve the efficiency of financial resources.

The PBOC adjusted interest rates on open market operations and medium-term lending facilities in August, lowering them by 10 and 15 basis points, respectively.

It also adjusted mortgage lending policies, lowering the lower limit for mortgage rates and the interest rates on existing first-home mortgages.

In addition to increasing lending, the PBOC also focused on improving the efficiency of existing loans. China's total outstanding RMB loans have exceeded 230 trillion yuan ($32.4 trillion), and annual new lending is around 20 trillion yuan.

Revitalizing inefficiently used financial resources and improving the efficiency of capital use, although not reflected as an increase in loans, can also inject new impetus into the high-quality development of the economy.

The PBOC's credit policies have also been effective in supporting private enterprises. The balance of small and micro loans to private enterprises increased from 11.6 trillion yuan at the end of 2019 to 28.7 trillion yuan at the end of September 2023, with an average annual growth rate of over 25 percent.

The balance of loans to technology-based small and medium-sized enterprises was 2.4 trillion yuan as of September 2023, up 22.6 percent year-on-year.

Going forward, the PBOC pledged to continue increasing its support for private and small and micro enterprises.

The central bank will also implement existing policy measures and use a variety of monetary policy tools to maintain adequate liquidity, keep the growth rates of money supply and social financing in line with nominal economic growth, and improve the transmission mechanism of monetary policy.