A view of the PBC building in Beijing. Photo: VCG
The People’s Bank of China (PBC), China’s central bank, said in a quarterly report on Friday that it would increase trading of government bonds in its open market operations to ensure sufficient market liquidity and support the development of the residential rental industry. The move is part of the central bank’s broader efforts to maintain a stable financial environment and support the country’s economic growth.
In parallel with these measures, the PBC is committed to maintaining an adequate growth in the supply of monetary credit. The bank is actively working to reduce the overall cost of social financing and to achieve an optimization of the credit structure by ensuring that the exchange rate remains stable and by improving risk mitigation strategies.
The PBC also pledged financial support for the residential rental market, which is expected to see robust demand and stable supply. The report identifies this sector as a crucial direction for the new development model of China’s real estate market and stresses that increased support is needed in this area.
Experts stressed the importance of the central bank’s focus on Chinese government bonds and emphasized the crucial role these bonds play in the financial market.
The strengthened role of government bonds as a benchmark for risk-free interest rates in the financial market is crucial, Tian Yun, a veteran economist in Beijing, told the Global Times on Saturday.
The PBC report shows a significant increase in bond issuance in China’s capital market. A total of 38.1 trillion yuan (5.3 trillion U.S. dollars) was issued in the first half of the year, an increase of 11.1 percent year-on-year. In particular, government bonds saw significant growth, reaching 5.8 trillion yuan, an increase of 1.3 trillion yuan from the same period last year.
In addition, the Central Bank addressed the housing market in the report and emphasized its support for the sustainable development of the residential rental market as a new growth model for the real estate sector.
As the rental housing market is still evolving, the increased concentration of the PBC is expected to promote growth and provide more stable housing options.
The report’s focus on the residential rental market is expected to play a crucial role in the stabilization and healthy development of China’s real estate market, Tian added.
According to PBC, rent is a key factor affecting real estate value, and the residential rental market is a crucial direction for the future development of the real estate market. At present, China’s residential rental sector is still in its early stages and the real estate market is in an adjustment period. There is a need to jointly use financial and other measures to activate the existing housing stock and develop the residential rental market.
By the end of June, financial institutions had issued rental housing loans totaling 24.7 billion yuan, with a balance of 12.1 billion yuan remaining in the form of guaranteed reloans. Further lending is expected to accelerate further, according to the PBC, supporting China’s booming housing rental industry.
