The People's Bank of China (PBOC) has outlined its strategic focus for the next five years, aiming to accelerate the construction of a financial powerhouse. The central bank recently issued the "15th Five-Year Reform and Development Plan," accompanied by nine specific action plans for related sub-sectors. This plan is seen as a critical bridge that translates the macro goal of building a financial power into a quantifiable and executable task list for the central bank, serving as a pivotal link between past achievements and future objectives.
Industry insiders note that the "Development Plan" is a concrete implementation of the national "15th Five-Year Plan" in the financial sector. It transforms the macro goal of building a financial power into a quantifiable and executable task list for the central bank, playing a crucial role as a hub connecting past and future efforts.
Targeting a "Dual Pillar" System for a Sound Monetary Policy Framework
The "Development Plan" prioritizes the construction of a "scientific and robust monetary policy system and a comprehensive macro-prudential management framework." It emphasizes the need to refine a modern monetary policy framework with Chinese characteristics, improve the mechanism for base money supply, and leverage the aggregate and structural functions of monetary and credit policy tools. The plan also calls for the development of a market-based interest rate formation, regulation, and transmission mechanism, and for allowing the market to play a decisive role in exchange rate formation, while keeping the renminbi exchange rate generally stable at a reasonable and balanced level.
The central bank's two core functions are promoting real economic development and maintaining financial stability. The monetary policy system and the macro-prudential management framework are the "dual pillar" tools for achieving these goals. Dong Ximiao, Chief Economist at Merchants Union, believes the plan will enhance the forward-looking and precise nature of monetary policy by improving the modern monetary policy framework and expanding the coverage of macro-prudential management, while also building a firewall against systemic risks, making the "dual pillar" regulation more robust and effective.
Looking ahead, how will the central bank build a "scientific and robust" monetary policy system? Zeng Gang, President of the Tianfu Financial Research Institute, suggests that "scientific" means policy-making must follow economic and financial laws to flexibly respond to a complex and changing environment, while "robust" emphasizes preventing asset bubbles, controlling leverage, and maintaining the overall safety of the financial system. With the expansion of China's economy and deepening of financial markets, relying solely on aggregate control is no longer sufficient. A combination of price-based and quantity-based tools is needed, considering economic growth, price stability, and exchange rate balance. Zeng also highlights the importance of dynamically improving the monetary policy framework, enriching the policy toolkit, and ensuring smooth transmission of monetary policy, which is the "last mile" for policy implementation.
The plan also specifies the improvement of the macro-prudential management system, expanding the central bank's macro-prudential and financial stability functions, and broadening the coverage of macro-prudential management. It aims to enrich macro-prudential management tools, establish a macro-prudential monitoring and assessment mechanism, strengthen the financial stability guarantee system, and prudently mitigate financial risks in key areas. Dong Ximiao notes that the plan focuses on the core issue of "accelerating the improvement of the central bank system," systematically restructuring fundamental systems such as monetary policy, macro-prudential management, and financial stability, signaling a comprehensive acceleration of the modernization of the central bank's governance system and capabilities.
Tech Finance Elevated to Institutional Construction Level
Over the next five years, the central bank will elevate tech finance to the level of institutional construction. According to the plan, it will continuously enhance the effectiveness of financial services for the real economy, improve the financial policy system that supports major strategies, key areas, and weak links, and build a technology finance system that aligns with technological innovation. Technological innovation is characterized by high investment, high risk, long cycles, and high uncertainty, making it difficult for traditional collateral-based credit models to accommodate.
PBOC Governor Pan Gongsheng has previously pointed out that technology-based enterprises typically go through different growth stages, including seed, start-up, growth, and maturity, each with varying risk characteristics and financial needs. In the early stages, active private equity, venture capital, and start-up investment are crucial participants. In the later stages, when business models become more mature, enterprises can access a variety of financing channels, including bank loans, bonds, and equity. Ming Ming, Chief Economist at CITIC Securities, also stated that as China's economic structure undergoes transformation, the financial market must adjust accordingly, further strengthening support for technological innovation and industrial upgrading.
Lian Ping, President of the Chief Economist Forum's International Financial Research Institute, noted that the significant shift in China's financial structure is not accidental but a result of long-term accumulation and synergy of multiple factors, including economic structural transformation. Given China's development stage, industrial structure, policy orientation, and global financial trends, the proportion of direct financing is expected to steadily increase over the next 5-10 years, forming a diversified financial structure where stocks, bonds, and loans are coordinated and mutually complementary. Zeng Gang added that it is necessary to develop multi-tiered technology credit products, improve credit evaluation systems and risk control methods for tech enterprises, and enhance banks' ability to serve asset-light, unsecured tech companies. He also emphasized the need to connect various financing channels, such as equity, debt, and insurance, and to leverage venture capital and mergers and acquisitions funds to support early-stage tech companies. Furthermore, China should explore mechanisms for longer-term funds, such as social security and insurance funds, to participate in tech investment, addressing the issue of "long-term funds not being used for long-term investment."
High-Quality Development of the Bond Market's "Tech Board" and Enhanced Financial Support for Consumption
The "Development Plan" also states that the central bank will work to build a high-quality "Tech Board" within the bond market, enhance the effectiveness of financial support for green development and low-carbon transformation, continuously improve the inclusive finance system, and refine the pension finance system. Since the launch of the bond market's "Tech Board," market participation has been steadily increasing, and the structure of tech enterprises issuing bonds is continuously improving. Regulators are leveraging the breadth and liquidity of the bond market to open new financing channels for tech assets that are difficult to monetize quickly in the short term, filling the gap between equity financing and traditional credit.
Zeng Gang believes that the plan's focus on "high-quality construction" of the Tech Board, rather than just expanding its scale, implies a future emphasis on the quality of bond issuers, the precision of fundraising use, and the improvement of information disclosure and risk pricing mechanisms. This will drive the transformation of tech bonds from "quantitative expansion" to "qualitative improvement." He also noted that this indicates that the bond market's role in serving technological innovation will become more institutionalized and normalized, becoming an important part of the multi-tiered financial market system supporting emerging industries and hard-tech enterprises. Dong Ximiao added that the plan guides financial resources from "inclusive coverage" to "precise drip irrigation," supporting breakthroughs in key core technologies through the construction of a tech finance system and the bond market's "Tech Board," while also strengthening services for green, inclusive, pension, and digital finance, as well as consumption, to promote economic structural optimization and upgrading.
According to PBOC data, as China's economy transitions from high-speed growth to high-quality development, the share of new loans to traditional credit giants like real estate and local government financing platforms has plummeted from over 60% a decade ago to about 10%. In contrast, the share of new loans in areas related to the "five major articles"鈥攖ech, green, inclusive, etc.鈥攈as risen to over 70%. The plan also calls for accelerating the development of digital finance and strengthening financial support to boost and expand consumption. Dong Ximiao believes that the steady development of the digital renminbi, the improvement of the credit reporting system, and the construction of a "rule-of-law central bank" and "digital central bank" will significantly enhance the accessibility of financial services and the central bank's performance, laying a more solid foundation for the efficient operation of the entire financial system.