On August 12, the People's Bank of China released its Monetary Policy Implementation Report for the Second Quarter of 2026, systematically reviewing the execution of monetary policy in the first half of the year. Industry experts noted that the central bank has flexibly deployed a mix of monetary policy tools while reforming and refining its policy framework to create a suitable monetary and financial environment that supports the stable development of the real economy and its transition toward innovation and quality.

Assessing the overall performance of financial work in the first half of the year, experts characterized the effects of the moderately accommodative monetary policy as persistent and evident, with financing conditions remaining relatively loose. They summarized the outcome with the phrase "sufficient quantity, low cost, and optimized structure." Firstly, regarding quantity, the People's Bank of China, while maintaining ample liquidity through the integrated use of various monetary policy tools such as reverse repos, medium-term lending facilities, and government bond trading, recently enhanced its short-term interest rate control mechanism by adding overnight reverse repo operations and narrowing the band for temporary standing repo and reverse repo facilities. This has further strengthened the precision and effectiveness of money market rate regulation. Total social financing and the broad money supply (M2) have maintained reasonable growth, with year-on-year growth rates continuing to outpace nominal GDP growth, and the overnight interbank offered rate, DR001, has generally operated smoothly. Secondly, concerning cost, interest rates on structural monetary policy tools were lowered at the beginning of the year, and efforts to explicitly disclose comprehensive corporate financing costs have been ongoing, focusing on reducing intermediary financing expenses. The role of the market interest rate pricing self-regulatory mechanism has been fully utilized to strengthen the supervision and enforcement of interest rate policies. The interest rates on newly issued corporate loans and individual housing loans have both been reduced to around 3%, with overall social financing costs operating at historically low levels. Thirdly, in terms of structure, since the start of the year, the central bank has not only created new structural monetary policy tools such as the private enterprise relending facility but has also refined the policy parameters of several existing structural monetary policy measures, expanding the scale and scope of these tools to continuously incentivize and guide financial institutions in increasing their financial support for key sectors. By the end of the first half of the year, loans for technology, green development, inclusive finance, the elderly care industry, and the digital economy sector had grown by 12.6%, 14.5%, 7.8%, 23.5%, and 15.1% respectively, all persistently outpacing overall loan growth. Additionally, some experts pointed out that monetary policy transmission is becoming smoother. The central bank is placing greater emphasis on expectation management and enhancing communication with the market, holding press conferences on January 15 and July 15 to promptly release and interpret monetary policy and to address key and hot issues of social concern, thereby improving the effectiveness of policy transmission. At the same time, the central bank has strengthened the coordination and cooperation between fiscal and monetary policies through various means to enhance the overall effectiveness of macroeconomic control.

The private enterprise relending policy has proven powerful and effective. The private sector is a vital force for driving innovation, promoting employment, and improving people's livelihoods in China. At the beginning of this year, the People's Bank of China announced the establishment of a 1 trillion yuan private enterprise relending facility specifically to support the development of small and medium-sized private enterprises. The underlying logic is to incentivize and guide local corporate financial institutions to increase credit supply to these enterprises at appropriately preferential interest rates. This tool has been particularly beneficial for medium-sized private enterprises, which often find themselves in a "sandwich layer" in terms of financing conditions. Industry experts explained that this policy tool is specifically designed to support small and medium-sized private enterprises, filling the gap in financing support for medium-sized private firms, which represents the biggest breakthrough and highlight of the policy. Currently, financing for private enterprises still exhibits structural imbalances. Large private enterprises have relatively strong financing capabilities, while small private enterprises benefit from numerous supporting policies. However, medium-sized private enterprises, though the backbone of the private economy, face a "sandwich layer" in financing conditions, lacking the diversified financing channels of large firms and being ineligible for the policy support available to small ones, making their financing difficulties particularly acute. The new relending tool includes these enterprises within its scope. According to the report, the policy was implemented very quickly. The central bank announced the establishment of the private enterprise relending facility on January 15, formally issued the notice on the tool on January 27, outlining its elements and management methods, actively organized branches to conduct policy briefings, guided them to establish internal management systems and business processes to accelerate policy implementation, and by February, branches had issued the first batch of private enterprise relending loans. In June, the online transaction business system for the private enterprise relending facility was officially launched, reducing the "footprint cost" for financial institutions and significantly improving transaction efficiency. The report also revealed the results of this tool: as of the end of July, the outstanding balance of private enterprise relending loans was approximately 800 billion yuan. In terms of its effect in incentivizing bank lending, by the end of the second quarter, loans from local corporate financial institutions to small and medium-sized private enterprises totaled about 15 trillion yuan, benefiting approximately 2.5 million market entities. In the first half of the year, the weighted average interest rate on new loans issued by local corporate financial institutions to these enterprises was 40 basis points lower than the same period last year.