Central bank's to-do list points way to stimulate economic vitality

The year 2024 was extraordinary for China, because, on the whole, the external environment facing China's economic development was complicated and severe. There are signs that China's economy is on an upward and solid footing, but it is still facing multiple pressures.

China has effectively intensified countercyclical regulation and improved policy precision, which play a positive role in supporting the recovery of the real economy and the stable operation of the financial market.

As China continues to promote its high-quality development, how to do it well in the new year will remain a challenge. A recent work conference convened by China's central bank put forward a series of key work points for the country's monetary policy in 2025, and made top-level institutional arrangements, which will create a good monetary and financial environment for expanding domestic demand, stabilizing expectations and stimulating economic vitality.

According to the conference, while implementing a moderately loose monetary policy, the country will focus on defusing financial risks in key areas through deepened financial reform, and use a combination of monetary policy tools to maintain sufficient liquidity, optimize the structure of capital supply and channel more financial resources to areas in urgent need. The country will also strengthen the guidance of policy interest rates to improve the transmission mechanism for the formation of market-oriented interest rates and promote the steady lowering of corporate financing and household credit costs.

In 2024, the central bank cut banks' required reserve ratio and policy interest rates twice, to drive down interest rates in the loan market, achieving good economic and social results. At present, the foundation for China's upward economic development is not yet solid, and traditional industries are still in the process of transformation and upgrading. The central bank working conference stressed that the structural functions of the country's monetary policy tools will be strengthened at the institutional level, creating a good monetary and financial environment for promoting sustained economic recovery, and effectively support high-quality development.

The central bank said it will give full play to its role to stabilize the economy and market expectation in a prudent manner, and better use structural monetary policy tools to support the risk disposal of small and medium-sized banks and ensure there are no systemic financial risks.

The fundamentals of China's sustained economic development have not changed, the strong regulatory capacity of China's economic, financial and monetary policies has not changed, and the strong resilience of the Chinese economy has not changed. All of these will contribute to China's high-quality economic development in 2025.