A view of the PBC building in Beijing Photo: VCG

The People's Bank of China (PBC), China’s central bank, said on Friday in a quarterly report that it will increase treasury bond trading in its open market operations to ensure ample market liquidity, and provide support for the development  of housing rental industry. The move is part of the central bank's broader effort to maintain a stable financial environment and support the country's economic growth.

In tandem with these measures, the PBC is committed to sustaining a reasonable growth in monetary credit supply. The bank is actively working to reduce the overall cost of social financing and guide an optimization of the credit structure, ensuring the exchange rate remains stable and enhancing  risk mitigation strategies.

The PBC also pledged financial support for the housing rental market, which is expected to experience robust demand and stable supply. The report identifies this sector as a critical direction for the new development model of China's real estate market, emphasizing increased support in this area.

Experts highlighted the significance of the central bank's focus on Chinese treasury bonds, emphasizing the crucial role the bonds in the financial market.

The enhanced role of government bonds as a benchmark for risk-free interest rates in the financial market is crucial, Tian Yun, a veteran economist based in Beijing, told the Global Times on Saturday. 

The PBC’s report have shown notable increase in bond issuance within the Chinese capital market, with a total of 38.1 trillion yuan ($5.3 trillion) issued in the first half of the year, marking an 11.1 percent increase from the previous year. Treasury bonds, in particular, saw substantial growth, reaching 5.8 trillion yuan, increased 1.3 trillion yuan from the same period last year.

Additionally, the central bank's report touched upon the housing market, underscoring its support for the sustainable development of the housing rental market as a new growth model for the real estate sector. 

As the market for rental housing is still developing, the PBC's increased focus is expected to bolster growth and provide more stable housing options.

The report’s focus on housing rental market is expected to play a critical role in stabilizing and healthily developing China's real estate market, Tian added.

According to the PBC, rent is a key factor affecting housing values, and the housing rental market is a crucial direction for the future development of the real estate market. Currently, China's housing rental sector is still in its early stages, and the real estate market is undergoing adjustment. There is a need to leverage financial and other policies collectively to activate existing housing inventories and cultivate the housing rental market.

As of the end of June, financial institutions have issued 24.7 billion yuan in rental housing loans, with a balance of 12.1 billion yuan in guaranty re-loans, The continued issuance of loans is anticipated to further accelerate, supporting the burgeoning housing rental industry in China, according to PBC.