PBOC Details Coordinated Policy Playbook to Steer Credit
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China’s central bank has laid out a detailed framework for coordinating with fiscal authorities to channel liquidity into the real economy, signaling a unified push in Beijing’s effort to stabilize growth through synchronized bond support, subsidized lending and shared risk.
The People’s Bank of China detailed the mechanisms in its fourth-quarter monetary policy report released Tuesday, following a January directive from Premier Li Qiang to align fiscal and financial tools to lift domestic demand. The central bank outlined three main channels of cooperation: managing liquidity to support government bond issuance; pairing central-bank relending with fiscal interest subsidies; and sharing risk to encourage lending to private companies.
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- China’s central bank and fiscal authorities are coordinating liquidity support via synchronized bond support, subsidized lending, and shared risk.
- The PBOC expanded relending quotas in January, raising equipment-upgrade funding to 1.2 trillion yuan and creating new 1 trillion yuan support for private enterprises.
- Interest subsidies and reduced rates target small businesses, private firms, tech innovation, and service consumption, aiming to support growth while containing debt risks.
- April 2024：
- PBOC launched the program for equipment-upgrade relending.
- May 2025：
- PBOC established the service-consumption relending facility.
- January 2026：
- Premier Li Qiang directed the alignment of fiscal and financial tools to lift domestic demand.
- January 2026：
- PBOC expanded the 'relending plus fiscal interest subsidy' model by raising the quota for equipment-upgrade relending by 400 billion yuan to 1.2 trillion yuan and cut the interest rate to 1.25%. Ministry of Finance widened the scope of interest subsidies.
- January 2026：
- PBOC added 500 billion yuan to relending quota for agriculture and small and midsize businesses, lowered the interest rate by 0.25 percentage points, and created a dedicated 1 trillion yuan relending quota for private enterprises.
- January 2026：
- Fiscal authorities introduced a 1.5 percentage point interest subsidy for loans to small and midsize enterprises in targeted industries.
- January 2026：
- Financial authorities consolidated existing tools into a new bond risk-sharing instrument for technology and private firms, backed by a 200 billion yuan relending quota and central fiscal funds.
- February 10, 2026：
- PBOC released its fourth-quarter monetary policy report detailing mechanisms for fiscal and monetary coordination.
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