May 26, 2020 08:09 PM

Yi Gang Explains: How Will Monetary Policy Reach the Real Economy?

Yi Gang, governor of the People’s Bank of China.
Yi Gang, governor of the People’s Bank of China.

People’s Bank of China Governor Yi Gang said that the central bank will continue offering financial support to businesses impacted by Covid-19, after the government pledged to provide new monetary policy instruments that can “directly stimulate the real economy” in its annual work report released Friday.

The central bank will support qualified local financial institutions in the banking sector to provide preferential loans to micro and small companies, Yi said in an interview (link in Chinese) published Tuesday, when responding to a question on the new monetary policy instruments.

As the coronavirus pandemic wreaks havoc on China’s economy, small and midsized businesses that are the backbone of the nation’s private sector and major employers have become one of the biggest casualties.

Yi also said that the central bank will work to foster development of supply-chain finance and increase credit support for major enterprises to drive resumption of operations along industrial chains. The central bank will increase its support for corporate bond sales as well, he said.

In the work report, Premier Li Keqiang called for large commercial banks to expand inclusive lending to micro and small businesses by more than 40% this year.

In terms of risks faced by small and midsize banks, Yi said that fallout from the coronavirus outbreak has put pressure on banks’ credit asset quality. Banks may see their nonperforming loan ratios rise and need to deal with more bad assets, he said.

A previous version of this story incorrectly stated that Yi’s interview was published by the central bank. It was not.

Tang Ziyi contributed to this report.

Contact reporter Timmy Shen ( and editor Gavin Cross (

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