China's central bank is set to maintain a moderately loose monetary stance for 2026, unveiling a suite of measures designed to lower borrowing costs and funnel more capital into the private sector and high-tech industries on Thursday.

The People's Bank of China (PBOC) held a press conference to introduce its 2026 policy and review the 2025 financial performance.

Interest rate cuts

China's central bank will lower interest rates on all structural monetary policy tools by 0.25 percentage points, effective from January 19, said the PBOC Deputy Governor Zou Lan. The one-year re-lending rate will be lowered from 1.5 percent to 1.25 percent as a result.

"The goal is to incentivise banks to extend credit in key sectors," Zou said, noting that the policy aligns with the directives set by the Central Economic Work Conference.

Increase targeted funding

The central bank is channeling trillions to ensure liquidity reaches specific segments of the economy.

A dedicated 1 trillion yuan ($144 billion) re-lending quota has been established specifically for small and medium-sized private firms.

Quotas for agriculture and small business sectors will be increased by 500 billion yuan.

The quota for tech innovation and technical transformation will jump from 800 billion yuan to 1.2 trillion yuan, expanding to include private small and medium-sized firms with high research and development spending.

The central bank also announced it would merge its bond risk-sharing tools for private and tech firms, providing a combined 200 billion yuan in support.

Real estate strategy

In a move to tackle inventory issues in the property sector, the PBOC, in coordination with the National Financial Regulatory Administration, is lowering the minimum down payment for commercial property loans to 30 percent from the current 50 percent.

2025 financial performance

China's outstanding social financing reached 442.1 trillion yuan by the end of 2025, representing a year-on-year increase of 8.3 percent, PBOC data showed on Thursday.

Total social financing for the year amounted to 35.6 trillion yuan.

By the end of December, China's broad money supply, or M2, reached 340.29 trillion yuan, representing an 8.5 percent year-on-year increase. M1, which covers cash in circulation, demand deposits and clients' reserves of non-banking payment institutions, grew 3.8 percent to 115.5 trillion yuan. The full year concluded with a net cash injection of 1.3 trillion yuan into the economy.

The Chinese currency renminbi (RMB) was stable against a basket of currencies in 2025 and appreciated 4.4 percent against the US dollar for the year.