Snapshot: China’s Central Bank Launches 10-Point Plan to Stabilize Markets

China’s financial authorities, led by the People’s Bank of China, unveiled a comprehensive 10-point monetary policy package aimed at enhancing market confidence, boosting long-term liquidity, and supporting innovation-driven growth. The measures—ranging from reserve requirement and interest rate cuts to new tools for tech financing—underscore China’s efforts to stabilize economic expectations amid global uncertainty and domestic restructuring.

On May 7, 2025, China’s State Council held a press conference where key financial regulators—including the People’s Bank of China (PBOC), the National Financial Regulatory Administration (NFRA), and the China Securities Regulatory Commission (CSRC)—outlined a sweeping set of policies aimed at stabilizing financial markets and economic expectations.

PBOC announces 10 new monetary measures

PBOC Governor Pan Gongsheng announced that the central bank will intensify macroeconomic regulation with 10 coordinated monetary policy tools designed to inject liquidity, guide market rates downward, and support high-quality development.

PBOC’s 10-point policy includes:

1. RRR cut of 0.5 percentage points: Estimated to release RMB 1 trillion (US$138 billion) in long-term liquidity.

2. Targeted RRR exemption: Temporary reduction of the reserve requirement ratio from 5 percent to 0 percent for auto finance and financial leasing firms.

3. Policy interest rate cut: A 0.1 percentage point reduction in the 7-day reverse repo rate from 1.5 percent to 1.4 percent, expected to drive down the loan prime rate (LPR).

4. Structural rate cuts: A 0.25 percentage point reduction in interest rates for structural tools, including agriculture and small and micro enterprises (SMEs) refinancing and pledged supplementary lending (PSL), to lower borrowing costs.

5. Housing fund loan rate reduction: A 0.25 percentage point cut in five-year personal housing provident fund loan rates, reducing first-home rates from 2.85 percent to 2.6 percent.

6. Tech refinancing expansion: Increase of RMB 300 billion (US$41.4 billion) in refinancing quotas for technology innovation and industrial upgrades, now totaling RMB 800 billion (US$110.4 billion).

7. Service consumption and elderly care support: Establishment of a new RMB 500 billion (US$69.0 billion) refinancing tool to promote loans in consumer services and elderly care.

8. Rural and SME lending expansion: An additional RMB 300 billion (US$41.4 billion) to support rural development, micro-enterprises, and private firms, aligned with structural rate cuts.

9. Capital market liquidity tools optimization: Merging RMB 500 billion (US$69.0 billion) in swap facilities for securities, funds, and insurers with RMB 300 billion (US$41.4 billion) in stock repurchase refinancing into a unified RMB 800 billion (US$110.4 billion) tool.

10. Tech innovation bond risk-sharing tool: Introduction of a central bank-backed low-cost refinancing mechanism to purchase tech bonds with shared-risk guarantees from local governments and market players.

These policies are aimed at strengthening credit flow to key sectors, lowering financing costs, and guiding financial institutions to support real economic needs, especially in emerging industries and innovation-driven enterprises.

Financial regulators to support SMEs, private enterprises, and real estate

NFRA Director Li Yunze also announced that a comprehensive support package for SMEs and private firms is being prepared. The goal is to enhance coordination between banks and insurers, stabilize business operations, and offset external shocks such as tariffs. He emphasized that regulatory frameworks will be tailored to sectors most impacted by global trade friction.

In addition, Li highlighted plans to accelerate financing frameworks tailored to China’s new real estate model, aiming to sustain market stabilization and reinforce economic recovery momentum. These measures are expected to improve capital access for developers and promote more sustainable housing development strategies.

In summary, the eight new regulatory initiatives announced by the NFRA to stabilize credit and capital flows include:

1. Introduce real estate financing rules aligned with the sector’s new development model to ensure continued stabilization.

2. Expand the scope of insurance fund investment pilots to bring in more long-term capital.

3. Revise risk weighting rules to lower stock investment risk factors for insurers, supporting a more active capital market.

4. Launch a comprehensive package to support SME and private enterprise financing, deepening coordination mechanisms.

5. Roll out banking and insurance policies to support foreign trade, with targeted aid to firms affected by tariffs.

6. Revise merger and acquisition loan rules to support industrial upgrading.

7. Allow eligible national commercial banks to establish financial asset investment companies to increase equity investment in tech firms.

8. Release guidelines for the high-quality development of tech insurance, enhancing risk-sharing and support for innovation.

CSRC: “Combination punch” to stabilize markets and promote innovation

The CSRC is deploying a coordinated strategy aimed at stabilizing market sentiment while reinforcing the capital market’s role in driving innovation.

To shore up investor confidence, the CSRC is enhancing market monitoring and risk response mechanisms while fully leveraging the stabilizing function of Central Huijin Investment Ltd., which is actively operating as a quasi-stabilization fund. Backed by the PBOC, this joint mechanism is regarded as one of the most robust globally.

At the same time, the CSRC is placing greater emphasis on supporting the development of new productive forces. This includes the forthcoming rollout of reform measures for the STAR Market and ChiNext Board, which will enhance institutional inclusiveness and adaptability in areas such as market tiering, review procedures, and investor protection. Revisions to the Measures for the Administration of Major Asset Restructuring of Listed Companies are also being finalized to facilitate smoother capital market-driven M&A activity. To strengthen innovation financing, the CSRC will accelerate the issuance of tech innovation bonds, streamline registration processes, and bolster credit enhancement mechanisms.

In parallel, efforts to mobilize medium- and long-term capital are being stepped up. These include encouraging listed companies to improve corporate governance and investor returns, while pushing forward the newly released Action Plan for the High-Quality Development of Public Funds, which aims to align fund managers and investors through shared risk and return, ultimately creating a virtuous cycle of rising returns, increased capital inflows, and a more stable market.

Outlook

The announcement of these coordinated monetary and financial policies marks a clear signal that Chinese authorities are prioritizing stability, confidence, and innovation amid complex global and domestic challenges. The emphasis on liquidity, inclusive financing, and technology-driven growth aligns with China’s broader 2025 economic transition goals.

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