Against the current backdrop of economic fragmentation, trade wars and volatile capital flows, China's top financial regulators have unveiled a raft of supportive measures aimed at insulating domestic markets from external headwinds, while accelerating the transition to high-quality growth. At a joint press conference in Beijing on May 7, heads of the People's Bank of China (PBC), the National Financial Regulatory Administration (NFRA) and the China Securities Regulatory Commission (CSRC) underscored a clear message: Amid global uncertainty, China is doubling down on self-reinforcement—not isolation—through calibrated policy innovation.

New impetus 

PBC Governor Pan Gongsheng opened with a candid assessment of global risks. "Economic fragmentation and trade tensions have become the new normal," he said, referencing the International Monetary Fund/World Bank Spring Meetings in late April where participants voiced alarm over disrupted supply chains and financial volatility.

Yet, China's response is neither defensive nor reactive. Instead, it is rooted in proactive, targeted measures designed to stabilize markets while nurturing emerging growth drivers.

Pan said the PBC will intensify macroeconomic control and implement a comprehensive monetary policy package comprising three major categories including liquidity tools, rate adjustments and targeted support through 10 specific measures.

Among them, a 0.5-percentage-point cut to financial institutions' reserve requirement ratio (RRR)—releasing 1 trillion yuan ($138 billion) in long-term liquidity—aims to shore up credit flows. This is paired with slashing the RRR for auto financing and financial leasing firms from 5 percent to 0.

Rate adjustments, including a 0.1-percentage- point reduction in the seven-day reverse repo rate to 1.4 percent, signal a broader push to lower borrowing costs and further support for the real economy. Through reverse repos, the central bank adds liquidity to the banking system by purchasing securities from commercial banks through bidding, with an agreement to sell them back in the future.

More financial support will be given to sectors including tech innovation, service consumption and elderly care via relending, according to Pan.

But perhaps the most socially resonant measure was the 0.25-percentage-point cut to personal housing provident fund loan rates, slashing mortgage costs for first-home buyers. The housing provident fund is a long-term housing savings plan made up of compulsory monthly deposits by both employers and employees. It can only be used by employees for house-related expenses.

The latest move is expected to save households over 20 billion yuan ($2.8 billion) each year. "This isn't just about stabilizing property markets," Pan clarified. "It's about safeguarding household budgets so consumption can thrive."

These announcements followed a high-level meeting of Chinese policymakers in late April that called for the faster implementation of more proactive and effective macro policies, ample liquidity and stronger support for the real economy, after an encouraging 5.4-percent GDP expansion in the first quarter (Q1) of 2025, Xinhua News Agency reported.

"These measures will complement the more significant fiscal policy measures that have been announced previously," Warwick Powell, an adjunct professor at Queensland University of Technology and a senior fellow at Taihe Institute, a Beijing-based think tank, told Beijing Review.

Health and growth 

Under targeted plans in technology, green development, eldercare and inclusive finance, along with policies to boost consumption and foreign trade, banks and insurers provided about 17 trillion yuan ($2.3 trillion) in new financing in the first four months of this year through loans, bonds and other means, Li Yunze, Minister of the NFRA, said at the press conference.

Since last September's expansion of the non-repayment renewal policy, approximately 4.4 trillion yuan ($600 billion) in loans have been extended for micro, small and medium-sized enterprises, better meeting their ongoing financing needs, he added.

The property sector also received powerful support. Expanding the "white list" mechanism—a coordinated effort between banks and local governments to identify viable real estate projects—has led to approved loans to surge to 6.7 trillion yuan ($923 billion), ensuring the completion of 16 million homes. Simultaneously, there was a 28-percent year-on-year jump in rental loans in Q1.

In the context of the China-U.S. trade conflict, robust financial support are being provided to enterprises with high foreign trade dependency, particularly small and micro-sized businesses, according to Li. He introduced that for market participants severely affected by tariffs and temporary operational challenges, a one-to-one approach provides tailored support, while financial institutions are urged to bolster financial services in critical areas such as cross-border e-commerce and overseas warehousing. 

The NFRA is going to further emphasize dynamism by expanding insurance capital's equity investment quotas by 60 billion yuan ($8.3 billion), lowering risk weightings for stock investments and fast-tracking mergers and acquisitions to spur industrial upgrades, Li said.

Capital market boost 

For CSRC Chairman Wu Qing, the recent market turbulence—exemplified by the selloff in early April induced by U.S. tariff hikes on Chinese imports—has been a stress test for China's capital market reforms. "Collective efforts reignite the flame; solidarity calms the stormy waves," Wu said at the press conference, citing a list of collaborations between departments to launch a comprehensive package of market-stabilizing measures across policy, capital and expectation fronts.

Wu underscored the importance of consolidating the momentum of market stabilization and recovery. He particularly mentioned the role of Central Huijin Investment, a state-owned investment company, as a quasi-stock market stabilization fund. "Central Huijin is conducting strong operations on the front lines, with the PBC serving as the backbone. This is one of the world's most powerful and effective models," Wu said.

To prioritize the development of new quality productive forces, upcoming measures include deepening reforms for the Sci-Tech Innovation Board (STAR Market) and ChiNext board through enhanced market inclusivity, streamlined review mechanisms and strengthened investor protections, while accelerating pilot initiatives, according to Wu. New quality productive forces represent China's strategic shift toward a more innovative, technology-driven and sustainable economic model to achieve higher productivity, competitiveness and long-term growth.

Wu added that the "technology narrative" in the A-share market is increasingly coherent, with its agglomeration effect becoming ever more pronounced. "The deep integration of technological and industrial innovation will continuously infuse the capital markets with valuable, dynamic sources of vitality," he said.

Although the external environment remains complex and unpredictable, the strategic direction for China's high-quality economic development is unmistakably clear and steadfast, according to Wu. "We boast reliable economic development, sound macroeconomic policies and steadfast institutional guarantees; even amid pervasive uncertainty, these strengths imbue our economy and capital markets with enhanced certainty," he concluded.

"Enhancing consumption hinges very much on consumer confidence, which is partly driven by the wealth effect as well, in addition to the income effect. For Chinese consumers, the wealth effect mostly manifests in two areas: the real estate holding and the equity holding. That is why the slew of policies announced target the real estate sector and the stock market, in the hope of turning them around," John Gong, a professor of economics at the University of International Business and Economics in Beijing, told Beijing Review. "The stock market has already come back a bit. The real estate market is starting to show signs of bottoming out."

On May 6, Chinese Foreign Ministry announced that He Lifeng, a member of the Political Bureau of the Communist Party of China Central Committee and Vice Premier of the State Council, would visit Switzerland from May 9 to 12. During the visit, He, as the Chinese lead person for China-U.S. economic and trade affairs, will have a meeting with the U.S. lead person Treasury Secretary Scott Bessent.

The rollout of the new policy measures shows that China has ample tools in its kit to shore up its economy and that China has the leverage to enter the trade negotiation, Liang Yan, a professor of economics at Willamette University in the United States, told Beijing Review. BR

(Print Edition Title: Adding Momentum)   

Copyedited by G.P. Wilson 

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