China’s central bank, securities regulator and finance regulators held a joint press briefing on 7 May 2025 to announce a few new monetary policy easings.
The details are as follows:
Policy tools | Detailed policy measures |
---|---|
Benchmark rates |
|
Relending quotas | Aggregate increase of RMB1.1trillion relending quota including RMB300bn for small businesses, RMB300bn for tech and innovation and RMB500bn for services consumption and elderly care |
Calibrate earlier policy tools to support equity market | Combine 2 liquidity facilities for supporting the equity markets with RMB800bn quota (RMB105 has been utilised) |
Regulatory policies |
|
This policy move resembles the September 2024 policy pivot, when a series of initiatives were introduced to stabilise growth.
The timing of the policy announcement follows the April Politburo meeting which pledged to roll out more proactive easing to mitigate the downside risks of trade wars. Therefore, it is not surprising that today’s announcement coincides with reports that China plans to engage in trade talks with the US aimed at de-escalation. This suggests that these policies are pre-emptive measures to stabilise market sentiment, particularly those focusing on supporting the equity markets.
The scale of the easing is incremental. Instead of deploying aggressive easing measures, the policymakers remain cautious in their approach to stimulus. Additional fiscal easing or stronger property easing policies are notably not included, potentially reserved for a larger shock if it occurs.
With this policy setting, the policymakers are adopting a “wait-and-see” approach to assess the impact of tariff wars and their effect on domestic sentiment. The aim is to provide consistent, incremental easing to stabilise growth and prevent any renewed slowdown, although it may not be a comprehensive policy package to trigger outsized upside growth potential yet.