The People’s Bank of China released its China Financial Stability Report (2025), reviewing 2024 financial conditions and the policy measures used to support the real economy while containing risks in areas such as financing platform debt, real estate and smaller banks. The report assesses the financial system as operating in a broadly stable manner, with overall financial risks continuing to converge and remaining manageable. Key measures highlighted for 2024 include two reductions in the reserve requirement ratio totalling 1 percentage point and two policy rate cuts totalling 0.3 percentage points, alongside efforts to lower deposit and lending rates and overall financing costs. The report also describes policy work to support debt risk resolution for financing platforms, including establishing a debt statistics monitoring and query system and promoting orderly, standardised exits; property-market support measures such as lowering minimum mortgage down payments, removing the national-level floor on mortgage rates, cutting housing provident fund loan rates, promoting reductions in existing mortgage rates, launching an affordable housing relending facility and strengthening rental housing finance policies; and an expanded central bank market-stability toolkit through a swap facility for securities, fund and insurance companies and a relending tool to support share buybacks and increases in shareholdings. Risk disposal efforts included “one province, one policy” reforms for local small financial institutions, using tools such as mergers and exits to reduce the number of high-risk small banks, and steps to build the financial stability safety net by advancing financial stability legislation, revisions to the People’s Bank of China Law, deposit insurance fund premium collection and the raising and governance of a financial stability guarantee fund. Looking ahead, the report sets priorities for maintaining ample liquidity and keeping overall financing costs low, treating stable growth and a reasonable rebound in prices as key monetary policy considerations. It also reiterates an exchange-rate framework centred on the market’s role in formation, maintaining flexibility and managing overshooting risks, and flags continued focus on macroprudential monitoring and targeted risk prevention in financing platform debt, smaller institutions and real estate finance.

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