PBoC: will focus on supporting technological innovation and expanding consumption

PBoC: will focus on supporting technological innovation and expanding consumption

The People's Bank of China (PBoC) is set to continue its supportive monetary stance in the second half of 2025, with a particular emphasis on technological innovation and expanding consumption. This strategy aligns with China's broader economic policy to drive growth through these key sectors.

The PBoC's approach is guided by the recent Politburo meeting, which underscored the need for a balanced approach between confidence and caution. With GDP growth in the first half of 2025 exceeding expectations, the central bank has the flexibility to maintain accommodative monetary conditions without resorting to large-scale stimulus immediately [3].

A key aspect of the PBoC's strategy is to support technological innovation. This includes funding channels such as relending quotas, preferential loan programs, and green finance facilities, which will prioritize high-tech industries like semiconductors and advanced manufacturing. By sustaining this push, China aims to enhance its global competitiveness in strategic sectors [3].

Expanding consumption is another critical focus area. To this end, the PBoC is expected to continue supporting consumption through targeted lending facilities and policy interest rate adjustments. This approach is designed to lower real financing costs and encourage household spending, thereby stimulating economic recovery [1].

In addition to monetary policy, the PBoC is also likely to coordinate with other government agencies to implement fiscal measures that support consumption and economic growth. For instance, the government has committed to accelerating local government bond issuance to finance infrastructure projects, which can indirectly boost consumption by creating jobs and stimulating demand [3].

Moreover, the PBoC is likely to work closely with commercial banks to ensure that the new interest subsidy policy for consumer loans is effectively implemented. This policy, which provides subsidies for personal consumer loans used for actual consumption, aims to lower borrowing costs and boost household spending. The subsidy covers transactions up to 50,000 yuan and key areas such as autos, elderly care, and education. By doing so, the PBoC aims to ease debt burdens and support economic recovery [1].

In conclusion, the PBoC's focus on supporting technological innovation and expanding consumption in the second half of 2025 reflects a strategic approach to drive long-term economic growth. By combining monetary policy with fiscal measures and close coordination with other government agencies, the PBoC aims to create a supportive environment for both businesses and households.

References:
[1] https://www.chinadaily.com.cn/a/202508/14/WS689d3593a310b236346f18bd.html
[2] https://www.scmp.com/economy/china-economy/article/3321880/china-no-2-global-computing-power-accelerates-build-out-ai-race-heats?module=china_future_tech&pgtype=homepage
[3] https://www.china-briefing.com/news/chinas-economic-policy-h2-2025/