To implement the spirit of the State Council executive meeting held on June 16 and promote sustained recovery of the economy, the People’s Bank of China (PBOC) has decided to increase the central bank lending quotas for the rural sector and micro and small businesses (MSBs) and the central bank discount quota by a total of RMB200 billion. The move is aimed at further ramping up financial support for agriculture, rural areas, farmers, MSBs, and private enterprises, providing liquidity in a targeted manner, reducing social financing costs, helping expand employment, and boosting recovery of the endogenous drivers for economic growth. Specifically, the central bank lending quota for the rural sector and that for MSBs will be increased by RMB40 billion to reach RMB800 billion and by RMB120 billion to reach RMB1.76 trillion, respectively, while the central bank discount quota will be expanded by RMB40 billion to stand at RMB740 billion.
In recent years, the PBOC has fully brought into play the dual functions of structural monetary policy tools in adjusting both the aggregate and structure of credit. It has stepped up support for the central bank lending and discount facilities for the rural sector and MSBs to give concrete backing to agriculture, rural areas, farmers, MSBs, and private enterprises. Meanwhile, it has worked to promote development of a long-term mechanism for inclusive finance. As of end-Q1 2023, outstanding central bank loans in support of the rural sector and MSBs and the outstanding balance of the central bank discount facility amounted to a national total of RMB2.6 trillion, hitting a new record high.
