At a July 14 State Council Information Office briefing detailing China's monetary policy execution and financial statistics for the first half of 2025, People's Bank of China (PBOC) officials addressed key financial concerns. Deputy Governor Zou Lan confirmed the central bank will maintain its moderately accommodative monetary stance while adjusting implementation intensity and pace according to evolving domestic and global economic conditions. The yuan's exchange rate, Zou asserted, possesses solid foundations for two-way fluctuations and fundamental stability, with China explicitly rejecting competitive devaluation strategies.

"Monetary policy has demonstrably bolstered real economic growth during this period," Zou stated, outlining a four-pronged approach for future policy execution. Aggregate measures will ensure ample liquidity while aligning money supply expansion with economic growth and inflation targets. Structurally, priorities include channeling resources toward technological innovation, consumption expansion, and private enterprises through coordinated deployment of specialized monetary instruments. Transmission efficiency will be enhanced through rigorous interest rate supervision and prevention of capital idling. Institutionally, PBOC will refine market-driven interest rate mechanisms while strengthening policy communication frameworks.

Since 2020, monetary easing has gained momentum through twelve reserve requirement ratio cuts and nine policy rate reductions. These actions have driven 115-basis-point and 130-basis-point declines in the one-year and five-year loan prime rates respectively.

Addressing exchange rate dynamics, Zou highlighted converging favorable conditions: China's 5.4% first-quarter GDP growth signals economic resilience; anticipated Federal Reserve rate cuts should narrow Sino-U.S. policy divergence; balanced international payments show a sustainable current account surplus at 2.2% of GDP; and matured forex market participants exhibit rational trading behavior. "Our exchange rate policy remains unequivocal," Zou emphasized. "Market forces determine yuan valuation, with the PBOC preserving flexibility while preventing overshooting through expectation management."

Separately, bond market data revealed robust first-half activity with total issuance reaching 44.3 trillion yuan—a 16% annual increase. Net bond financing accounted for 38.6% of aggregate social financing growth. Responding to queries about aggressive bond investments by regional lenders, Financial Markets Department Director Cao Yuanyuan acknowledged banks' legitimate asset allocation needs while cautioning against excessive risk-taking. "Moderate bond holdings help smaller banks stabilize earnings," she noted, "but institutions must balance returns against interest rate and credit risks." The PBOC will enhance monitoring of high-risk entities and share findings with prudential regulators.

Notably, China's specialized bond financing channel for technology innovation has gained rapid traction since its May launch. By June 30, 288 entities had issued approximately 600 billion yuan of sci-tech innovation bonds, including over 400 billion yuan in the interbank market.