PBOC Governor Pan Gongsheng Reports to NPC: Monetary Easing to Continue, Stabilizing Stocks, Property, and Exchange Rate
nashnova research
PBOC Governor Pan Gongsheng reported to the NPC Standing Committee on the past year's financial work, signaling continued monetary easing, multi-tool support for equity and property markets, and a basically stable yuan — with corporate lending rates already at a historic low of 2.96%.
Will borrowing stay this cheap?
Pan stated clearly: China will keep an appropriately loose monetary stance, using reverse repos, the Medium-term Lending Facility (MLF — the PBOC's tool for lending to commercial banks), and government-bond trading to keep liquidity ample.
New corporate loans now carry a 2.96% weighted-average rate; new mortgage rates sit at 3.05%; the 5-year AAA corporate bond yield has dropped to 1.7% — all at historic lows.
This means → borrowing costs are already rock-bottom, yet the report still pledges to "cut intermediary financing fees" — room for further cuts remains.
What is holding up the stock market?
Two PBOC monetary-policy tools for capital markets remain active. At the same time, regulators are channeling long-term money into equities — social-security funds, mutual funds, and insurers — and speeding up fund-product registrations.
On the enforcement side: stronger protections for small investors, a dedicated crackdown on financial fraud, harsh penalties for market manipulation and rumor-spreading, and strict enforcement of delisting rules.
In plain terms = one hand pulls money in, the other pushes bad actors out — the goal is both confidence and quality.
The bond-market "Tech Board," launched in May 2025, has issued 3.3 trillion yuan in tech-innovation bonds, creating a new funding channel for technology firms.
How much policy ammunition does the property market still have?
Commercial banks have approved over 8.4 trillion yuan in loans through the "white-list" mechanism — a regulator-vetted roster of compliant property projects that get priority lending.
Regulators also lowered the minimum down-payment ratio for commercial-property purchases and rolled out mortgage-interest subsidies, easing pressure on both the entry threshold and ongoing repayment costs.
This means → the policy toolkit is already wide open; the next test is execution — whether the money reaches projects, homes get delivered, and the market actually stabilizes.
Why is the yuan appreciating?
Over the past year (Oct 2025–Sep 2026), the yuan rose roughly 5.8% against the dollar; foreign-exchange reserves stood at $3.4 trillion at end-September 2026.
Pan emphasized "letting the market play the decisive role in exchange-rate formation," while using macro-prudential tools to keep the FX market orderly.
This reflects a clear stance: the PBOC will not artificially weaken the yuan, but it will not tolerate wild swings either — the rate is market-driven, with policy guardrails.
How far along is the clean-up of local debt and financial risk?
The number of local-government financing vehicles (LGFVs) has fallen 92% from March 2023; outstanding commercial financial debt from these platforms is down 79% — the "bomb disposal" on hidden local debt is nearing completion.
Commercial banks report a capital-adequacy ratio of 15.4%, an NPL ratio of 1.5%, and insurers show a comprehensive solvency ratio of 177.7% — the safety cushion across banking and insurance remains thick.
In plain terms = local governments once ran up massive "shadow debts" through off-balance-sheet borrowing platforms; over nine-tenths of those platforms are now shut, and the remaining debt is shrinking. The PBOC also placed Zhongbang Bank under administration — a signal that troubled individual institutions get a targeted, surgical response.
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