The People's Bank of China is progressing with the optimization and enhancement of its monetary policy framework, aiming to transition from a system primarily focused on quantitative control to one centered on price-based regulation. This strategic shift was highlighted during a recent press conference held by the State Council Information Office.

Mr. Xie Guangqi, Director-General of the Monetary Policy Department at the People's Bank of China, provided an overview of financial developments in the first half of the year. He noted a deceleration in the growth rate of RMB loans during this period, while bond financing, particularly corporate bond financing, saw a significant increase. Specifically, net corporate bond financing reached 2.07 trillion yuan, an increase of 916.7 billion yuan compared to the same period last year.

Mr. Xie Guangqi suggested that these changes in financing structure are likely long-term and trend-setting. They reflect the profound adjustments in China's economic structure, the transition between old and new growth drivers, the dynamic adaptation of the financial system, and the deepening of supply-side structural reforms in finance. Looking ahead, monetary and credit operations are expected to shift from extensive expansion to intensive development, with "slower growth but higher quality" in lending potentially becoming a new normal in macroeconomic performance. He elaborated from several perspectives.

Firstly, regarding the stage of economic development, as China's economy transitions from rapid growth to high-quality development, financial services to the real economy are not only reflected in the continuous expansion of aggregate financial supply but also in the improvement of quality and efficiency. For instance, new loans in key strategic financial sectors now account for over 70% of the total, and corporate loan interest rates have fallen to around 3%, a historically low level, indicating that financial support for the real economy remains robust.

Secondly, considering structural transformations, this encompasses both industrial structure and financing structure. From an industrial perspective, new quality productive forces have flourished in recent years but exhibit lower reliance on bank loans. In contrast, traditional heavy-asset sectors like real estate and infrastructure are credit-intensive but experiencing slower growth. New lending to emerging sectors must first offset the decline in traditional sectors before showing a net increase in total loan volume. Regarding financing structure, bank loans dominated China's financing landscape in earlier years, with financial markets being relatively small. In recent years, financial markets have continued to develop, offering more diverse and abundant financing channels. Financing methods such as bonds and stocks have correspondingly provided benign substitution and diversion for bank loans. In 2025, loans accounted for 45% of the incremental aggregate social financing, while the combined share of bond and equity financing reached 47%, surpassing the loan share for the first time. This structural shift is reflected in aggregate financial data, where the growth rates of aggregate social financing and broad money supply (M2) are higher than the loan growth rate.

Additionally, other factors influence loan data. For example, the resolution of local government implicit debt in recent years has involved the replacement of some loans. The risk resolution of some small and medium-sized financial institutions also involves writing off a portion of loans, both affecting incremental loan figures. Banks are placing greater emphasis on the actual effectiveness of lending in meeting real financing needs and are proactively recalling loans associated with practices like "lend and immediately recover" or "deposit first, then lend," which can also impact year-on-year loan growth rates at specific points in time.

Mr. Xie Guangqi stated that in response to these changes in economic and financing structures, the People's Bank of China is continuously optimizing and improving the monetary policy framework. It is gradually deemphasizing quantitative intermediate targets and promoting a shift in the monetary policy framework from quantity-based to price-based control, striving to create a suitable monetary and financial environment. He noted that a single loan indicator no longer fully reflects the financing conditions for the real economy. It is recommended to combine loans and bonds for a comprehensive view and to pay more attention to indicators like interest rates and financing structure that holistically reflect social financing conditions.

Regarding M0 and household loans, Mr. Xie Guangqi explained that M0, representing cash in circulation, sees its growth rate influenced by factors such as payment habits of enterprises and households, the transaction environment, and cash demand. A significant portion of household loans consists of mortgage loans. As households actively and moderately "deleverage," reducing interest payments and debt, their balance sheets will also undergo dynamic changes.