People's Bank of China Governor Pan Gongsheng published a signed policy article in Qiushi, the Communist Party's flagship theoretical journal, on Wednesday, signalling a shift away from loan-growth targets toward interest-rate tools as the central bank's primary policy instrument.
Pan said maintaining past overall credit growth rates would be "difficult and unnecessary" and that slower, higher-quality loan growth is likely to become a "new normal" feature of the Chinese economy.
QUANTITATIVE TARGETS TO BE DE-EMPHASISED
The governor said the PBoC will de-emphasise quantitative targets, especially for loans, treating financial aggregates more as observational or reference indicators rather than binding policy goals. For the 15th Five-Year Plan period covering 2026 to 2030, Pan said the central bank will strengthen market-based interest-rate formation, regulation and transmission mechanisms as its primary policy tool.
The shift reflects an evolution in how the PBoC intends to steer monetary policy, moving away from the credit-quantity-driven approach that has characterised much of China's post-reform banking system toward one more closely aligned with interest-rate-based frameworks used by many other major central banks.
OUTSTANDING LOANS EXCEED 280 TRILLION YUAN
China's outstanding loan balance exceeds 280 trillion yuan, or about $41.7 trillion, with property and local-government financing vehicle loans still representing a large but declining share of that total, the article stated. Pan noted that direct financing through bonds and equity accounted for roughly one-third of outstanding aggregate social financing at the end of June 2026, and that combined bond and equity financing exceeded loans' share of new financing during 2025.
The figures underscore a structural shift already underway in China's financing mix, with direct capital markets financing playing an increasingly prominent role alongside traditional bank lending. Pan's article, published in the party's leading theoretical journal, carries significant weight as a signal of the direction Chinese monetary policy is expected to take over the coming five-year planning period.
Pan noted that property and local-government financing vehicle loans remain a large but declining share of China's outstanding loan balance of more than 280 trillion yuan, or about $41.7 trillion, pointing to a gradual rebalancing of the banking system's loan book away from these historically significant but increasingly constrained segments. The observation reinforces the broader message that the composition, and not just the pace, of credit growth is shifting.
By publishing in Qiushi rather than through a standard central bank statement, Pan ensured the article carries the weight of the Communist Party's theoretical journal, a publication traditionally used to signal significant shifts in economic policy thinking ahead of their formal implementation during the 15th Five-Year Plan period running from 2026 to 2030.
Pan's characterisation of slower loan growth as "difficult and unnecessary" to reverse, alongside his description of a coming "new normal" for credit expansion, gives markets a clear signal that the PBoC does not intend to use aggressive quantitative loan targets to offset the structural slowdown, instead relying on interest-rate tools to manage the economy through the transition.
The article's framing around the 15th Five-Year Plan period, running from 2026 through 2030, ties Pan's proposed shift toward interest-rate tools to China's longer-term national economic planning cycle, suggesting the change in approach is intended to be a durable feature of monetary policy rather than a short-term adjustment.