The monetary authority has rolled out a series of policies in recent mont
hs to ensure adequate liquidity in the financial sector and accelerated loan issuance to co
mpanies. The measures include a new lending facility, called the targeted medium-term lending facility, which was in
troduced in December to encourage commercial banks to increase lending to small and private firms.
The central bank further cut the required reserve ratio for financial institutions by 1 percentage point in January and inj
ected another 800 billion yuan of capital into the market. That followed four reserve ratio cuts last year.
Supported by the liquidity, the average interest rate in financial mark
ets had already declined by January, which actually provided much cheaper funding t
o commercial banks and borrowers in the corporate sector, Sun said.
Accompanied by the credit boost, growth of the broad money sup
ply, or M2, accelerated in January to 8.4 percent from 8.1 percent at the end of December, t
he central bank said. Government bond issuance, meanwhile, has also picked up since the start of this year.