China’s central bank holds steady with 200 billion yuan net bond purchase

Consistency of bond purchase, kept at the same level as previous month, seen as key gauge of China’s monetary and fiscal policy coordination

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A man walks past the headquarters of the People’s Bank of China in Beijing. Photo: Reuters

Published: 9:30pm, 31 Oct 2024

China’s central bank bought a net 200 billion yuan (US$28.07 billion) in treasury bonds in October, to provide what it termed a “reasonable” level of liquidity as the country grapples with a set of economic challenges and attempts to meet its annual growth target.

The People’s Bank of China said on Thursday that the net injection, kept at the same level as the 200 billion yuan purchased in September, is intended to “increase the intensity of countercyclical monetary policy adjustments and maintain a reasonable level of liquidity in the banking system.”

The central bank’s holdings of central government bonds had climbed to 2.26 trillion yuan (US$317.14 billion) by the end of September, up from 2.03 trillion in August and 1.52 trillion in July.

The holdings account for 5 per cent of the central bank’s total assets, up by 1.5 percentage points in two months.

The purchase came after its announcement of a larger-than-expected monetary easing package. The market has been expecting a large issuance of government bonds next year, including special treasury bonds, ultra-long treasury bonds and local special-purpose bonds, to defuse debt risk and provide funding for construction.