The front view of the People's Bank of China building in Beijing with a Chinese flag

The headquarters of the People's Bank of China in Beijing, a central financial institution of China. By By Shutterstock.com / Shan_shan.

Economy

China’s Central Bank Moves: How Monetary Policy Shifts Aim to Bolster Economic Growth Amid Global Headwinds

China‘s central bank will boost monetary policy, coordinating with fiscal moves to support economic growth.

byAndres Castro

September 26, 2025, 12:07 PM

Executive Summary

China’s central bank (PBOC) plans to intensify monetary policy adjustments and enhance coordination with fiscal policies to bolster economic growth.

The PBOC cited a “complex and severe” external environment, including rising trade barriers and weakening global economic momentum, as the reason for these policy shifts.

The central bank will maintain ample liquidity, guide financial institutions to increase credit supply to the real economy, and closely monitor the bond market.

The Story So Far

China’s central bank is intensifying monetary policy adjustments and enhancing coordination with fiscal policies primarily due to a “complex and severe” external environment. This environment is characterized by rising trade barriers, weakening global economic momentum, and persistent uncertainty surrounding global inflation trends and international monetary policy shifts, all of which necessitate proactive domestic measures to bolster economic growth and maintain stability.

Why This Matters

China’s central bank is signaling a more aggressive and coordinated approach to economic management, intensifying monetary policy adjustments and enhancing fiscal collaboration to counteract a “complex and severe” external environment, including rising trade barriers and a global slowdown. This integrated strategy aims to bolster domestic growth and maintain stability by ensuring ample liquidity and increased credit supply to the real economy, with the success of these efforts being crucial for China’s economic resilience amidst persistent global uncertainties.

Who Thinks What?

The People’s Bank of China (PBOC) assesses the external economic environment as “complex and severe,” citing significant headwinds including rising trade barriers, weakening global economic momentum, and persistent uncertainty surrounding inflation trends.

The PBOC plans to intensify monetary policy adjustments, enhance coordination with fiscal policies, maintain ample liquidity, and guide financial institutions to increase credit supply to the real economy to bolster economic growth and ensure continued stability.

China’s central bank has announced plans to intensify monetary policy adjustments and enhance coordination with fiscal policies to bolster economic growth, citing a “complex and severe” external environment. The People’s Bank of China (PBOC) highlighted significant headwinds, including rising trade barriers, weakening global economic momentum, and persistent uncertainty surrounding inflation trends and international monetary policy shifts.

Economic Headwinds and Policy Imperatives

While acknowledging steady progress in the nation’s economy, the PBOC underscored that China faces substantial challenges. These encompass a global economic slowdown, divergent performance among major economies, and the ongoing impact of trade protectionism. Such conditions necessitate a proactive domestic policy stance to ensure continued stability.

In response, the central bank emphasized the need for a more accommodative monetary policy and stronger counter-cyclical adjustments. It stated that the strength and pace of policy implementation would be carefully managed, ensuring that monetary measures effectively support economic objectives.

Monetary and Fiscal Coordination

The PBOC pledged to maintain ample liquidity within the financial system, guiding financial institutions to increase credit supply to the real economy. It also committed to closely monitoring the bond market, with particular attention to changes in long-term yields. These steps are aimed at fostering a supportive financial environment.

A crucial element of the strategy involves enhancing coordination between monetary and fiscal policies. This integrated approach is designed to promote stable economic growth and maintain reasonable price levels. The central bank’s moves signal a concerted effort to navigate the current global economic uncertainties.