Meeting of the Political Bureau of the CPC Central Committee: We must accelerate the implementation of more proactive and effective macro policies and promptly lower the reserve requirement ratio and interest rates.

On April 25, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work. The meeting affirmed the achievements made so far this year, while also pointing out that the foundation for China’s sustained economic recovery and improvement still needs to be further consolidated. Given the growing impact of external shocks, it is essential to strengthen bottom-line thinking, fully prepare contingency plans, and carry out economic work in a solid and pragmatic manner.

Based on a precise assessment of the current economic situation, the meeting emphasized the need to strengthen unconventional counter-cyclical adjustments and clearly stated that we should accelerate the implementation of more proactive and effective macroeconomic policies, making full and effective use of a more active fiscal policy and a moderately accommodative monetary policy. In terms of monetary policy, it is necessary to appropriately lower the reserve requirement ratio and interest rates in a timely manner, introduce new structural monetary policy tools, and establish special relending facilities for consumer services and elderly care. As for fiscal policy, we should speed up the issuance and utilization of special bonds issued by local governments and ultra-long-term special government bonds.

“The meeting clearly emphasized strengthening unconventional counter-cyclical adjustments, which is in line with expectations. Given the significantly heightened external shocks currently underway, domestic counter-cyclical policies must strike the right balance in terms of intensity and, when necessary, break with convention to fully stabilize employment and the economy.” It is expected that macroeconomic policies in the second half of the year will significantly step up efforts to stabilize growth, and there is ample policy room for various counter-cyclical adjustment tools.

The policy toolbox combines flexibility with unconventional features.

In the first quarter of this year, China's economy grew year-on-year. With a growth rate of 5.4%, the economy has outpaced both last year’s full-year and first-quarter growth rates, placing it among the top performers among major global economies. This reflects a continued trend of steady progress and gradual recovery, with multiple production and demand indicators accelerating their rebound. While we’ve seen positive results so far this year, we must also recognize that external shocks are intensifying, and the foundation for China’s sustained economic recovery and improvement still needs further strengthening. In light of this, the meeting called for continuously refining the policy toolkit for stabilizing employment and the economy, reinforcing unconventional counter-cyclical adjustments, and making every effort to consolidate the fundamental pillars of economic development and social stability.

“The policy toolbox will exhibit a dual characteristic of both flexibility and unconventional measures,” experts said. Given the heightened uncertainty surrounding U.S. tariff policies, which is disrupting economic forecasts in our country, coupled with the meeting’s call to “strengthen bottom-line thinking and fully prepare contingency plans,” it is expected that subsequent policies will closely monitor marginal changes in high-frequency economic data and appropriately intensify regulatory efforts during periods of market volatility, thereby ensuring that the economy remains within a reasonable range.

Judging from the conference’s arrangements, policy efforts have been stepped up, and the attitude has become more proactive. On the one hand, the conference emphasized the need to strengthen unconventional counter-cyclical adjustments to address external shocks, signaling an increase in policy intensity. On the other hand, greater attention is being paid to the timing and effectiveness of policy implementation—policies must be introduced promptly in response to changes in the actual economic and international situation, and existing policies must be fully and effectively utilized.

Regarding the deployment of macro policies, the meeting emphasized that established policies should be introduced and take effect as early as possible, while also promptly introducing additional reserve policies in response to changing circumstances. It is expected that the implementation of policies to be unveiled during the Two Sessions will further accelerate in the coming period. In addition, the meeting once again underscored... “Strengthening the consistency of policy orientations” signals that the coordination between fiscal policy and monetary policy will be intensified.

Establish new structural monetary policy tools.

Regarding monetary policy, the meeting continued the wording from the Government Work Report, placing emphasis on expectation management and structural optimization. The meeting proposed timely reductions in the reserve requirement ratio and interest rates to maintain ample liquidity and step up support for the real economy. New structural monetary policy tools will be introduced, along with innovative policy-based financial instruments, to bolster technological innovation, expand consumption, and stabilize foreign trade. In addition, the meeting also proposed establishing re-lending facilities specifically for service consumption and elderly care.

Since last year, monetary policy has been relatively strong, providing robust support for the economy’s recovery and improvement. The latest data show that... In March, the incremental scale of social financing reached 5.89 trillion yuan, an increase of 1.06 trillion yuan over the same period last year, placing it at a relatively high level for the same period in history. The outstanding balance of RMB loans stood at 265.41 trillion yuan, up 7.4% year-on-year. The People's Bank of China has previously stated on multiple occasions that it has ample reserve tools and policy room available, ensuring that the overall money and credit supply has strong momentum. Monetary policy adjustments will be tailored to both domestic and external conditions, responding flexibly to changing circumstances, strengthening counter-cyclical adjustments, and helping maintain steady and favorable growth in aggregate demand.

Market analysts believe that, in response to changing economic conditions, monetary policy adjustments will flexibly time their interventions to ensure both growth and stability of expectations. The meeting proposed establishing special re-lending facilities for service consumption and elderly care, which would provide targeted support to the lifestyle services sector and the elderly care industry, thereby stimulating consumption by boosting investment in the service sector.

This meeting highlighted... “Establish new structural monetary policy tools,” including support for technological innovation, boosting consumption, stabilizing foreign trade, and supporting service consumption and elderly care. Relevant major strategies, key areas, and weak links will all receive greater support from monetary policy.

Accelerate the issuance and use of special bonds and ultra-long-term special government bonds.

On fiscal policy, the meeting proposed that— “Accelerate the issuance and use of special local government bonds and ultra-long-term special government bonds. Firmly safeguard the bottom line of ‘three guarantees’ at the grassroots level.” The Ministry of Finance has announced arrangements for the issuance of ultra-long-term special government bonds totaling 1.3 trillion yuan. The issuance scale has increased compared to last year, and the issuance schedule has been brought forward, reflecting the commitment to stepping up implementation and making full and effective use of fiscal policies.

According to the meeting’s arrangements, in the next phase, fiscal policy will focus on ensuring effective implementation and accelerating the disbursement of fiscal funds. This includes, first, speeding up the issuance and use of special bonds issued by local governments and ultra-long-term special government bonds. In the second quarter, issuance of special government bonds and ultra-long-term special government bonds will commence, complemented by special bonds. “Self-examination and self-initiated action” will be accelerated, and the issuance of new special-purpose bonds will also pick up pace. Second, we will speed up the pace of fiscal spending, optimize the expenditure structure, strengthen targeted allocation, and firmly safeguard the bottom line of “three guarantees” at the grassroots level.

The meeting called for accelerating the issuance and use of special local government bonds and ultra-long-term special government bonds. This means that the current fiscal policy is focused on speeding up the pace of spending—appropriately shifting some of the fiscal expenditures originally scheduled for the second half of the year to the second quarter—in order to fully boost domestic demand. In particular, it is crucial to implement broader-scale programs such as trade-in schemes for consumer goods and to innovate other policy tools, thereby effectively stimulating domestic consumption and absorbing any potential shift from exports to domestic sales. It is expected that the pace of issuing new government bonds this year will be generally accelerated, thereby creating room for more vigorous fiscal efforts in the second half of the year.

The industry also has expectations and hopes regarding the additional fiscal policies that may be introduced in the coming period. “Once the negative impact of tariffs on exports becomes evident, there is still room for fiscal policy to be further strengthened.” Additional policy measures that could be introduced in the coming period include issuing more government bonds or special government bonds; increasing the intensity of consumer subsidies and expanding their scope, thereby fostering and boosting new growth areas such as cultural and tourism consumption, household services consumption, digital consumption, and sports consumption.

In addition, this meeting emphasized the need to accelerate efforts to address the issue of local governments’ overdue payments to enterprises. It was pointed out that overdue payments to enterprises represent a critical challenge in the subsequent debt-resolution process, and relevant funding arrangements are expected to be made.