A view of the PBC's headquarters in Beijing Photo: cnsphoto

The People’s Bank of China (PBC) said on Tuesday that the country’s financial work shall be based and focused on boosting common prosperity, and upon which the central bank has vowed to improve the capacity of finance in serving real economy, prevent the disorderly expansion of capital and strengthen financial services to rural rejuvenation. 

The statement came after Chinese top leadership last week stressed efforts to promote the second centennial goal in the pursuit of high-quality development and coordinate work to forestall major financial risks at the tenth meeting of the Central Committee for Financial and Economic Affairs.

The Party committee of China’s central bank has held a meeting on Friday to deliver and study the spirit of the tenth meeting of the Central Committee for Financial and Economic Affairs, according to a statement on the website of PBC on Tuesday. 

The central bank has pledged it shall avoid “a flood of stimulus,” and comprehensively use multiple monetary policy tools to maintain reasonable and abundant liquidity and guide the reasonable growth of credit. 

Also, it will continue and cement work on finance supporting micro-, small- and medium-sized companies, and guide financial institutions to scale up the level of support on key industries and weak procedures including micro- and small-sized firms, agricultural, manufacturing and green development.

The central bank stressed financial support on coordinated industrial development and balanced regional development, noting that it aims to promote the sound and regulated development of capitals. Financial service will also be leveraged to better serve rural rejuvenation to promote the common prosperity of farmers and rural areas.

Observers said that PBC’s statement sends a clear signal that China’s financial policy will tilt toward improving structural management in the finance system, which is in line with China’s overall work emphasis in reducing wealth gap in the next several decades.  

“China’s financial regulators will work to prevent capital inflow into assets which have inflated bubbles, such as property and stock markets, and guide money injection into real economy that provide employments,” Cong Yi, dean of the School of Marxism at Tianjin University of Finance and Economics, told the Global Times on Tuesday. 

Cong added that there are plenty of rooms for China’s financial policy maneuvers to help reduce urban-rural divide and disparity in the development of different industries. 

“But it is also of vital importance to prepare for potential systemic financial risks during the policy switch process, as the process of squeezing out bubbles could create bad loans and lead to default in the short term,” Cong said.

China on July 1 declared that it has reached its first centenary milestone development goal – building a moderately prosperous society, or xiaokang, in all respects. And the country is marching toward the second centennial goal of building common prosperity, an essential requirement of socialism and a key feature of Chinese-style modernization.