lørdag 22. juni 2024

China Sets the Stage for the Third Plenum by Unveiling Financial Reforms and Monetary Policy Direction

The 2024 Lujiazui Forum, held in Shanghai from June 19 to 20, continued its tradition as a pivotal platform for China’s financial discourse. Since its inception in 2008, the forum has become instrumental as a venue where government officials, financial regulators, and industry leaders gather to share insights on pressing economic issues and make significant announcements related to China’s financial reforms.

During the forum, Pan Gongsheng, the governor of the People’s Bank of China (PBOC), reiterated a commitment to supportive monetary policies while clearly distancing itself from Western-style quantitative easing. Instead, Pan emphasized a gradual approach to incorporating bond purchases as a liquidity management tool. This pivot aligns China’s monetary policy more closely with global central banking practices, moving from quantity-based to price-based regulation.

Pan also suggested potential interest rate reforms, aiming to prioritize a single short-term rate to guide markets, thus reducing reliance on the one-year policy rate, signaling a step toward modernizing China’s monetary policy framework.