China’s Monetary Policy Will Stay ‘Accommodative’ Despite Deflated Data, PBOC Chief Says

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People’s Bank of China Governor Pan Gongsheng speaks at the 2024 Lujiazui Forum in Shanghai on Wednesday. Photo: People’s Bank of China

China’s recent moves to deflate financial data doesn’t mean the country is changing its “accommodative” monetary policy stance, the governor of the People’s Bank of China (PBOC) said.

China took measures to regulate market behavior this year, Pan Gongsheng said Wednesday at the Lujiazui Forum, an annual financial conference in Shanghai. Two of the measures were revising the way the financial sector’s GDP is calculated and strengthening regulations to prevent banks from offering extra interest to attract deposits.

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China’s People’s Bank (PBOC) revised financial data metrics, calculating GDP based on banks' profits rather than loan and deposit growth.
Measures also include cracking down on banks offering extra interest to attract deposits, leading to short-term negative effects on financing data.
Despite these regulatory changes, China maintains an “accommodative” monetary policy to support economic recovery, contrasting with global trends of high interest rates.

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What Happened When

January 2024：: The financial sector’s GDP has been calculated by the National Bureau of Statistics mainly based on metrics related to banks’ profits, such as growth in net interest income.

April 2024：: Policymakers launched a crackdown on banks offering interest rates that exceeded regulatory caps to attract corporate deposits.

April 2024：: A rare contraction in aggregate financing to the real economy was reported.

Wednesday, June 19, 2024：: Pan Gongsheng spoke at the Lujiazui Forum, an annual financial conference in Shanghai, where he discussed the measures taken to regulate market behavior and the changes in how the financial sector’s GDP is calculated.

AI generated, for reference only