Plan expands central bank's regulatory reach

Editor's note: The People's Bank of China, China's central bank, has unveiled a comprehensive reform and development plan for the 2026-30 period. Economic Information Daily spoke to Dong Ximiao, chief economist at Merchants Union Consumer Finance; Tian Lihui, a finance professor at Nankai University; and Tian Xuan, dean of Peking University's Guanghua School of Management, on the importance of the plan. Below are excerpts of the interviews. The views don't necessarily represent those of China Daily.

The plan aims to strengthen China's financial sector and improve the central banking system. It focuses on restructuring the institutional frameworks that govern monetary policy, macro-prudential management and financial stability.

By expanding the scope of macro-prudential management, the central bank's regulatory reach will extend beyond the traditional banking system to include nonbank financial institutions and a wider range of financial activities across the economy.

Historically, risks have often emerged in areas beyond the scope of regulatory oversight. With a more comprehensive macro-prudential safety net, the focus will shift from reactive to proactive risk management. This is a fundamental shift in the central bank's role from merely responding to crises to actively shaping a secure financial environment.

The plan maintains a prudent approach to monetary policy, combining countercyclical and cross-cyclical adjustments with greater precision and flexibility.

The country's monetary policy is expected to shift from quantitative to price-based regulation by improving the mechanism for market-based interest rate formation, regulation and transmission. This will allow monetary policy tools to better achieve both aggregate and structural objectives.

At the same time, market-oriented exchange rate reforms will be advanced to strengthen the ability of China's financial system to withstand external shocks.

The proposal to develop a financial system tailored to scientific and technological innovation indicates a structural transformation of financial services. As the economy moves from factor-driven to innovation-driven growth, the allocation of financial resources must evolve accordingly.

Traditional lending decisions based largely on collateral and cash flow will increasingly give way to a pricing model that assesses technological barriers and the scope for substitution.

The parallel development of green finance, pension finance and digital finance represents a major avenue for the structural reallocation of credit resources.

Technology finance will play a more prominent role, providing technology companies with diverse financing options and increasing the supply of medium- and long-term capital for innovation. A comprehensive financial system combining investment, lending, bonds and insurance is expected to develop further.

During the 2026-30 period, the central bank is expected to guide financial resources away from broad-based coverage toward more targeted and effective support. By developing a technology-finance system and a technology-focused segment of the bond market, it aims to provide stronger financial backing for breakthroughs in key and core technologies.

Meanwhile, greater support will be directed toward green, inclusive, pension, digital and consumer finance, helping optimize the economic structure and upgrade the quality of growth.

The plan also seeks to expand the global use of the renminbi in international trade, develop offshore renminbi markets and strengthen cross-border financial infrastructure connectivity. These efforts are aimed at increasing the use of the renminbi in trade settlement, investment, financing and financial transactions.