context: Rising concerns over the economy are barely concealed in the latest report from the central bank, which has refrained from substantial easing so far into the pandenmic. Massive easing is still unlikely as it could jeopardise the structural transition to a green, quality-growth model. Rhetorical shifts may nonetheless signal further stablising efforts and possibilities for loosening in particular sectors.

Some ‘phased, structural, and cyclical constraints’ are faced by the domestic economic recovery, and it is becoming more difficult to maintain a stable economy, states the Q3 2021 Monetary Policy Implementation Report released on 19 Nov 2021. Comparing with the Q2 report, the latest one

  • dropped statements such as
    • adhering to normal monetary policy
    • managing well the gate of currency creation
    • refrain from flooding the market with money
  • added statements
    • enhancing the stability of total credit growth
    • pressure of inflation is basically under control
    • foreign monetary policy adjustments have limited impact on China
    • safeguarding the stability of the property market and the rights of consumers
  • reinstated phrases
    • put servicing the real economy in a more prominent position

Based on these rhetorical shifts, monetary policy may further tilt in the direction of stablising growth, argues Wang Jingwen 王静文 Minsheng Bank senior macro researcher.

The possibility of substantial credit easing is low in the contexts of ‘housing anti-speculation’ and ‘common prosperity’, argues Wang Han 王涵 Industrial Securities chief economist. Easing will be more precise and targeted, concentrating on specific sectors like green finance, ‘new infrastructure’ and SMEs, Wang notes.

Regarding property market risks, the report states they are generally controllable. Stabilising the market and preventing a hard landing remain key, states Ren Zeping 任泽平 Soochow Securities chief economist. Policies are loosening, and support for reasonable real estate financing is being ramped up, Ren observes, adding that they still serve to fine-tune the ‘anti-speculation’ framework.