This year marks the final year of the "14th Five-Year Plan." Over the past five years, under the strong leadership of the Party Central Committee, China's financial system reform has been comprehensively deepened, the quality and efficiency of financial services to the real economy have significantly improved, financial risks in key areas have been resolved in an orderly manner, reform and opening-up of the financial sector have continued to advance, and new major achievements have been made in financial development.
To introduce and explain the important achievements of the People's Bank of China's work during the "14th Five-Year Plan" period, a series of interviews with relevant department heads of the People's Bank of China will be launched.
"We have maintained a supportive monetary policy stance, and a modern monetary policy framework with Chinese characteristics has initially taken shape, with more effective implementation and transmission, helping to smoothly complete the main goals of economic and social development during the '14th Five-Year Plan,'" said Pan Gongsheng, Governor of the People's Bank of China, at a State Council Information Office press conference on "High-quality Completion of the '14th Five-Year Plan'" in September 2025.
From nine reserve requirement ratio cuts releasing 7 trillion yuan of long-term liquidity to structural tools covering the financial "five major articles," from clarifying the 7-day reverse repo operation rate as the policy rate to establishing an institutionalized monetary policy communication mechanism, a series of solid measures have jointly outlined the construction trajectory of a modern central banking system, delivering an impressive report card of "stable aggregate, optimized structure, reduced costs, and stable expectations."
Recently, a responsible person from the Monetary Policy Department of the People's Bank of China was interviewed, engaging in in-depth exchanges on the work and achievements of the People's Bank of China in promoting monetary policy framework transformation and interest rate marketization reform during the "14th Five-Year Plan" period.
**Question:** The "14th Five-Year Plan" outline proposes building a modern central banking system and improving the monetary supply control mechanism. What work has the central bank carried out in leveraging the dual functions of monetary policy tools in terms of aggregate and structural aspects, and what achievements have been made?
**People's Bank of China Monetary Policy Department:** Since the "14th Five-Year Plan," the People's Bank of China has earnestly implemented the decisions and deployments of the Party Central Committee and the State Council, improved the modern monetary policy framework with Chinese characteristics, and focused on leveraging the dual aggregate and structural functions of monetary policy tools.
Governor Pan Gongsheng stated at the 2024 Lujiazui Forum that in recent years, China's monetary policy stance has been supportive, providing financial support for sustained economic recovery and creating a favorable monetary and financial environment.
We have comprehensively used various monetary policy tools to maintain ample liquidity. Since the "14th Five-Year Plan," the People's Bank of China has cut reserve requirements nine times, cumulatively reducing the required reserve ratio by 3.5 percentage points and providing approximately 7 trillion yuan in long-term liquidity.
We have comprehensively used various monetary policy tools to flexibly adjust short- and medium-term liquidity, enriched the monetary policy toolkit, and conducted open market treasury bond trading and buyout reverse repo operations.
We have strengthened research and understanding of the laws and new characteristics of monetary credit supply and demand, promoting reasonable growth in monetary credit.
We have continuously improved the structural monetary policy tool system and strengthened financial services for major strategies, key areas, and weak links. Adhering to the basic principles of "focusing on priorities, being reasonable and appropriate, and having advances and retreats" for structural monetary policy tools, we have created and implemented multiple structural monetary policy tools supporting technological innovation, green development, and service consumption, achieving full coverage of the financial "five major articles."
At the same time, we have explored expanding the central bank's macroprudential and financial stability functions, enriching monetary policy tools for maintaining financial market stability.
Overall, monetary policy regulation during the "14th Five-Year Plan" period has achieved good results. First, financial aggregates have grown reasonably. The annual growth rates of social financing scale and broad money supply (M2) balance have both reached around 9%-10%, significantly higher than the 6%-7% nominal economic growth rate. Second, comprehensive social financing costs have declined to low levels. In August 2025, newly issued corporate loans and individual housing loan rates were approximately 3.1%, down about 1.5 and 2.3 percentage points respectively from the end of 2020. Third, credit structure has continued to optimize. The growth rates of inclusive micro and small enterprise loans, manufacturing medium and long-term loans, and technology loan balances have all been faster than the growth rate of all loans.
Going forward, the People's Bank of China will continue to improve the modern monetary policy framework with Chinese characteristics, continuously enhance the adaptability and effectiveness of financial support for high-quality development of the real economy, and support Chinese-style modernization with high-quality financial development.
**Question:** Establishing a market-based interest rate formation and transmission mechanism is an explicit requirement of the "14th Five-Year Plan" outline. In recent years, the People's Bank of China has been continuously improving the market-based interest rate regulation mechanism. Could you introduce the progress of related work?
**People's Bank of China Monetary Policy Department:** During the "14th Five-Year Plan" period, the People's Bank of China has continuously deepened interest rate marketization reform and improved price-based monetary policy regulation mechanisms, achieving significant results.
First, the market-based interest rate regulation mechanism has become more complete. In July 2024, the People's Bank of China clarified that the 7-day reverse repo operation rate in open market operations is the policy rate, rationalizing the interest rate transmission relationship from short to long term. By adjusting policy rates, we influence money market rates and bond market rates, and further influence deposit and loan rates, creating an appropriate financing environment for real economy development.
Second, the degree of interest rate marketization has further increased. In April 2022, we established a market-based adjustment mechanism for deposit rates and guided local legal financial institutions to adjust deposit rates in coordination with large banks through the interest rate self-discipline mechanism. In May 2024, we removed the nationwide lower limit on individual housing loan rates, basically achieving marketization of commercial loan rates. In September 2024, we improved the housing loan rate pricing mechanism, promoting coordinated adjustment of existing and newly issued housing loan rates, and reducing existing housing loan rates.
Third, interest rate policy implementation and supervision have been continuously strengthened. Since April 2024, we have rectified banks' irregular manual interest supplementation, guided non-bank interbank demand deposit rates to adjust following policy rates, established a deposit bidding rate reporting mechanism, standardized corporate deposit service agreements, urged banks to reasonably determine loan rates based on operating costs, supported banks in stabilizing net interest margins, conducted interest rate policy enforcement inspections, and facilitated smooth interest rate policy transmission.
Fourth, real economy financing costs have significantly decreased. Since the "14th Five-Year Plan," we have cumulatively reduced policy rates by 0.8 percentage points, guiding the 1-year and over-5-year LPR to decrease by 0.85 and 1.15 percentage points respectively, significantly reducing real economy financing costs. Since September 2024, we have launched pilot work on disclosing comprehensive corporate loan financing costs, with 30 provinces (autonomous regions, municipalities) participating nationwide, benefiting a large number of small and medium-sized enterprises. In August 2025, the weighted average rates for newly issued corporate and individual housing loans were approximately 3.1%, continuing to maintain low levels.
**Question:** Promoting two-way financial opening is important work during the "14th Five-Year Plan" period, and the central bank has repeatedly stated publicly that monetary policy should balance internal and external equilibrium. What efforts has the central bank made in recent years to maintain basic stability of the RMB exchange rate?
**People's Bank of China Monetary Policy Department:** During the "14th Five-Year Plan" period, China's foreign exchange market has shown strong resilience, and the RMB exchange rate has maintained basic stability at a reasonable and balanced level, creating favorable conditions for China to independently implement monetary policy and stabilize financial markets.
We have adhered to letting the market play a decisive role, with the RMB exchange rate achieving dynamic equilibrium through two-way fluctuations. Over the past five years, we have steadily deepened exchange rate marketization reform, significantly enhancing RMB exchange rate flexibility, with the average annualized volatility maintained at around 4%, making two-way fluctuation the norm. When facing situations such as major adjustments in major economies' monetary policies, the RMB exchange rate has been able to restore equilibrium within a certain period, effectively functioning as an automatic stabilizer for macroeconomy and international balance of payments.
We have adhered to a managed floating exchange rate system and resolutely prevented exchange rate overshooting risks. Practice has proven that the managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies suits China's national conditions. The People's Bank of China has implemented comprehensive measures, strengthened expectation guidance, and prevented exchange rate overshooting risks. During the "14th Five-Year Plan" period, the China Foreign Exchange Trade System (CFETS) RMB exchange rate index has generally operated around 100, and the RMB-USD bilateral exchange rate has performed steadily among major international currency pairs.
We have adhered to the exchange rate risk-neutral concept, consolidating the micro foundation for maintaining exchange rate stability. During the "14th Five-Year Plan" period, the People's Bank of China and the State Administration of Foreign Exchange have continuously and vigorously guided enterprises and financial institutions to establish risk-neutral concepts, directing financial institutions to actively provide exchange rate hedging services for small and medium-sized enterprises. China's foreign exchange market participants have become more mature, exchange rate hedging tools are used more widely, and the market is more resilient. In September 2025, corporate foreign exchange hedging ratios were approximately 30%, significantly higher than 17% in 2020.
Looking ahead, China's macroeconomic fundamentals remain solid, international balance of payments is expected to maintain autonomous equilibrium, and there is a strong foundation for long-term exchange rate stability. However, exchange rate influencing factors are diverse. We will continue to adhere to the market's decisive role in exchange rate formation, maintain exchange rate flexibility, strengthen expectation guidance, prevent exchange rate overshooting risks, and maintain basic stability of the RMB exchange rate at reasonable and balanced levels.
**Question:** Establishing an institutionalized monetary policy communication mechanism and effectively managing and guiding expectations is one of the important characteristics of modern monetary policy frameworks. How do you evaluate the central bank's monetary policy expectation management work during the "14th Five-Year Plan" period?
**People's Bank of China Monetary Policy Department:** The "14th Five-Year Plan" outline particularly emphasizes the importance of expectation management. Conducting good monetary policy communication and expectation guidance is a direction that the People's Bank of China has continuously and persistently worked toward.
During the "14th Five-Year Plan" period, the People's Bank of China has continuously innovated mechanisms and strengthened effective communication with markets through various means.
First, we have authoritatively released and interpreted policies. Bank leadership has repeatedly attended State Council Information Office press conferences, releasing comprehensive monetary and financial policy packages. We have strengthened in-depth exchanges with markets through the Lujiazui Forum and Financial Street Forum.
Second, we have continuously improved normalized expectation management mechanisms. We daily publish open market operation transaction announcements through our official website, monthly release important financial data, and quarterly publish the "China Monetary Policy Implementation Report" and Monetary Policy Committee meeting press releases, helping markets accurately understand monetary policy orientation. We annually publish the "People's Bank of China Annual Report," comprehensively and objectively reflecting monetary policy implementation effects.
Third, we have done well in financial data release and interpretation. We have timely conducted data interpretation and policy promotion in combination with data changes and market focus points.
Fourth, we have told China's financial story well. Through meetings of international organizations such as the International Monetary Fund (IMF) and Bank for International Settlements (BIS), we have promoted and introduced China's macroeconomic and financial situation, enhanced communication and understanding, and strengthened international investor confidence.
Fifth, we have increased public education on monetary policy knowledge. We have launched series of interpretation articles through WeChat public accounts, providing easy-to-understand and diverse financial science popularization articles.
Through unremitting efforts, China's monetary policy transparency has steadily improved in recent years, policy comprehensibility and authority have been enhanced, policy transmission effects have significantly improved, and we have accumulated some experience in doing good expectation management work.
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