China shifts monetary policy stance for first time since 2011
What's the story
China's top leaders have announced a major shift in their monetary policy approach, the first such shift in nearly 14 years.
This strategic shift comes as the nation prepares for a potential second trade war with the US after Donald Trump returns to office next month.
The Politburo, led by President Xi Jinping and 24 senior officials of the ruling Communist Party, has said it will adopt a "moderately loose" strategy next year.
Policy shift
China's fiscal policy to be 'more proactive'
Along with the shift in monetary policy, Chinese officials have also promised a "more proactive" fiscal policy next year. This is a departure from their previous commitment of simply being "proactive."
The official Xinhua News Agency hinted on Friday that China can increase its borrowing and fiscal deficit in 2025.
Policy cycles
China's monetary policy: A history of tightening and loosening
China's monetary policy has undergone several tightening and loosening cycles over the years. However, since 2011, it has remained "prudent" all along.
This was a departure from the "moderately loose" stance taken during the Global Financial Crisis to rein in rising inflation.
The latest change shows an urgency to ramp up the easing measures taken by the central bank after a hoped-for post-pandemic boom fizzled.
Easing measures
China's central bank takes action amid economic challenges
In response to the unfulfilled post-pandemic boom, the People's Bank of China has cut interest rates and reduced the amount of cash banks are required to hold in reserves.
However, despite these steps, authorities have struggled to stimulate increased borrowing.
This December, a conclave is set to outline the agenda for the larger Central Economic Work Conference where officials will discuss 2025 priorities including growth targets.