The State Council Information Office held a press conference where Pan Gongsheng, Governor of the People's Bank of China, Li Yunze, Director of the China Banking and Insurance Regulatory Commission, and Wu Qing, Chairman of the China Securities Regulatory Commission, introduced the financial support for high-quality economic development. A number of significant policies were introduced simultaneously to increase the intensity of monetary policy regulation and further support stable economic growth.
At the press conference, Pan Gongsheng, Governor of the People's Bank of China, announced that the reserve requirement ratio would be reduced by 0.5 percentage points in the near future, providing about 1 trillion yuan of long-term liquidity to the financial market. At the same time, the existing housing loan interest rates will be reduced and the minimum down payment ratio for housing loans will be unified, guiding commercial banks to reduce the existing housing loan interest rates to near the newly issued housing loan interest rates, with an expected average reduction of about 0.5 percentage points. The minimum down payment ratio for the first and second homes will be unified, and the minimum down payment ratio for the second home loan at the national level will be reduced from 25% to 15%.
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At the same time, the central bank's policy interest rates will be reduced, with the 7-day reverse repurchase operation interest rate reduced by 0.2 percentage points, from the current 1.7% to 1.5%, guiding the loan market quotation interest rate and deposit interest rate to move down synchronously, and maintaining the stability of commercial banks' net interest margin.
He also mentioned the creation of new monetary policy tools to support the stable development of the stock market, swaps for securities, funds, and insurance companies, supporting qualified securities, funds, and insurance companies to obtain liquidity from the central bank through asset pledge, which will greatly enhance the ability to obtain funds and increase stocks. Special re-lending will be created to guide banks to provide loans to listed companies and major shareholders, supporting share buybacks and increases.
Li Yunze said that the financial asset investment companies established by large commercial banks have carried out equity investment pilots in Shanghai, and now they have the conditions to expand the pilot. According to the relevant arrangements of the State Council, to truly play the leading role of the pilot, the following measures are proposed: First, expand the scope of pilot cities, study to expand the pilot scope to 18 large and medium-sized cities with active technological innovation such as Beijing; Second, appropriately relax the amount and restrictions of equity investment, increase the proportion of on-balance-sheet equity investment from 4% to 10%, and increase the proportion of investment in a single private equity fund from 20% to 30%. Third, optimize the assessment mechanism and establish a long-cycle differentiated performance assessment.
Interest rates are further adjusted
Pan Gongsheng said that the impact of this interest rate reduction on the net interest margin of banks is neutral, and the impact on bank income is neutral. The central bank's reserve requirement ratio reduction directly provides banks with low-cost, long-term funds, and the reduction of interest rates for medium-term lending facilities and open market operations will also reduce the cost of bank funds. It is expected that the loan market quotation interest rate and deposit interest rate will also move down symmetrically. He revealed that in the design of this interest rate adjustment plan, the technical team of the People's Bank of China has gone through multiple rounds of serious quantitative analysis and evaluation, and the impact of policy changes on bank income is neutral, and the net interest margin of the banking industry will remain basically stable.
Regarding the adjustment of housing loan interest rates, he believes that banks need a certain amount of time for technical preparation, and the subsequent improvement of the commercial bank's mortgage loan mechanism, banks and customers will dynamically adjust based on market-oriented principles, and negotiate autonomously. The expected average reduction of this existing housing loan interest rate is 0.5 percentage points, which is expected to benefit 50 million households and 150 million people, reducing household interest expenses by about 150 billion yuan per year. Regarding the cross-bank transfer of existing housing loans, he said that the initial transfer of mortgages will be implemented within the bank, and then consider whether cross-bank transfer of mortgages is needed.
In the future, at the national level, there will be no distinction between the first and second homes, and the unified minimum down payment ratio will be 15%. Localities can implement differentiated down payment ratio arrangements within their jurisdictions based on this. Commercial banks determine the specific down payment ratio based on the risk status and willingness of customers.
In addition, the central bank will optimize the re-lending policy for affordable housing, and the proportion of central bank funds supporting the 300 billion yuan affordable housing re-lending previously created will be increased from 60% to 100%, enhancing the market-oriented incentives for banks and acquisition entities.Loan Renewal Policy Optimization
Li Yunze stated that at present, regions with a concentration of high-risk institutions have all formulated specific reform and resolution plans, which are being implemented in a stable and orderly manner according to a "one province, one policy" approach. At the same time, guidance is being provided to banks and insurance institutions to actively cooperate in resolving real estate and local government debt risks. Currently, China's financial industry, especially large financial institutions, is operating steadily with controllable risks. With the gradual resolution and mitigation of the three major risks of real estate, local debt, and small and medium-sized financial institutions, financial risks are steadily converging. The Financial Regulatory Authority will resolutely guard the bottom line of not occurring systemic financial risks.
Li Yunze indicated that the National Financial Regulatory Authority will optimize the loan renewal policy from three aspects: First, the target of loan renewal will be expanded from some small and micro enterprises to all small and micro enterprises. Small and micro enterprises that have real financing needs and face financial difficulties after their loans mature can apply for loan renewal support if they meet the conditions. Second, the loan renewal policy will be temporarily extended to medium-sized enterprises for a period of 3 years. Medium-sized enterprises with liquidity loans maturing before September 30, 2027, can refer to the loan renewal policy for small and micro enterprises. Third, the risk classification standards will be adjusted. For enterprises that operate legally and compliantly, continue to operate, and have good credit, the loan renewal will not be downgraded in risk classification due to the extension alone.
Promoting Mergers and Acquisitions
Wu Qing stated at the press conference that the Securities Regulatory Commission (SRC) will issue opinions to promote medium and long-term capital entering the market and six measures to promote mergers and acquisitions.
He pointed out that to implement the spirit of the central financial work conference, in April of this year, the State Council introduced the new "Nine National Articles". The SRC has seriously implemented these, worked with relevant parties to formulate several supporting documents, and established and revised more than 50 regulatory rules. Together with the new "Nine National Articles", they have formed a "1+N" policy and regulatory system. A batch of key measures are also in the process of implementation, and some preliminary results have been achieved in strengthening regulation, preventing risks, and promoting high-quality development in the capital market. First, the market ecosystem has further improved. Second, the basic market system has been accelerated to improve. Third, the market function has maintained its basic role. Fourth, the reform and innovation of the capital market have been firmly promoted.
Wu Qing further stated that the Third Plenary Session of the 20th Central Committee of the Communist Party of China made strategic deployments for further comprehensively deepening the reform of the capital market. The SRC will adhere to strengthening the foundation and strict supervision,坚持以改革促发展、保稳定， and continuously improve the capital market functions that coordinate investment and financing to better serve Chinese-style modernization. The SRC will focus on "three highlights".
First, highlight the enhancement of the inherent stability of the capital market. Establish a clear orientation of rewarding investors and improve the quality and investment value of listed companies. Accelerate investment-side reforms and promote the construction of a "long money, long investment" policy system. The SRC will issue guidance on promoting medium and long-term capital into the market. The SRC will also further improve the policy toolkit and maintain the risk bottom line.
Second, highlight serving the recovery and improvement of the real economy and high-quality economic development. Focus on serving key areas such as new quality productive forces, make good use of various capital market tools such as stocks, bonds, and futures, and take multiple measures to activate the mergers and acquisitions market. The SRC will also issue six measures to promote mergers and acquisitions. At the same time, efforts will be made to work with all parties to facilitate the circulation of "raising, investing, managing, and exiting" in private equity venture capital funds.
Third, highlight protecting the legitimate rights and interests of small and medium investors. Resolutely crack down on illegal and irregular behaviors such as financial fraud and market manipulation. At the same time, strive to implement more exemplary cases in representative litigation and advance compensation.In addition, he pointed out that it is actively encouraged for listed companies to strengthen industrial integration. Some industries are large but not strong, numerous but not excellent. While the capital market supports the development of emerging industries, it will also continue to help traditional industries improve resource allocation efficiency by reasonably increasing industrial concentration. This support will be provided by significantly simplifying the review process.
Rational View of Exchange Rate Fluctuations
Pan Gongsheng stated that recently, the monetary policies of major economies have been adjusted, and the depreciation pressure on the yuan exchange rate has been significantly alleviated. The Federal Reserve's 50 basis point rate cut is the first rate cut after several years of the interest rate hike cycle, and the monetary policies of major economies have entered a rate-cutting cycle, with the appreciation momentum of the US dollar weakening. With the convergence of the domestic and foreign monetary policy cycles, the external pressure on the yuan exchange rate to remain basically stable has been significantly reduced.
He believes that the factors affecting the exchange rate are diverse. From an external perspective, uncertainties still exist due to the differentiation of economic trends, geopolitical changes such as the US election, and the external environment and the trend of the US dollar. Looking at the domestic situation in China, the yuan exchange rate still has a stable and solid foundation. At the macro level, the economic recovery and upward trend will further consolidate growth. The strong monetary policy introduced by the People's Bank of China this time is helpful in supporting the economy and promoting consumption and investment.
In his view, market participants need to have a rational view of exchange rate fluctuations, and enterprises should focus on their main business. The People's Bank of China's position on exchange rate policy is clear and transparent, adhering to the market's decisive role in the exchange rate market, strengthening expectation guidance, forming a one-sided consensus expectation in the foreign exchange market, and maintaining the yuan exchange rate at a reasonable and balanced level.