People's Daily Japanese Edition 16:37, 16 January 2026

The People's Bank of China (PBoC) announced on the 15th that it will lower the re-lending and rediscount rates by 0.25 points from 19 January 2026. This means that banks can obtain funds from the People's Bank of China at a lower cost, which will positively encourage lending and investment in key sectors and further promote the model transformation and optimisation of the economic structure.

Such structural rate cuts differ significantly from a comprehensive rate cut and do not lower the loan prime rate (LPR), which is an indicator for preferential lending rates, through a reduction in policy interest rates. Re-lending refers to the PBoC lending to banks, not directly to enterprises. After the reduction of re-lending and rediscount rates, banks that can obtain lower-cost funds will be able to lend to small and micro enterprises, scientific and technological innovation, green transformation (GX), and other key sectors at lower interest rates, thus reducing the overall financing costs for the real economy.

According to reports, after this reduction, the re-lending rates to support agriculture and small and micro enterprises will be 0.95% for 3-month loans, 1.15% for 6-month loans, and 1.25% for 1-year loans; the rediscount rate will be 1.5%, the interest rate for pledged supplementary lending (PSL) will be 1.75%, and the rate for specific structural financial policy tools will be 1.25%.

Whether banks can obtain lower-cost funds depends on how they allocate these funds.

In recent years, structural financial policy tools have been continually renewed to support re-lending for scientific and technological innovation and technological improvement, service consumption and elderly care, inclusive financing for small and micro enterprises, and CO2 emission reduction, covering all "five key areas of finance" (technology finance, green finance, financial inclusion, finance for the elderly, and digital finance), while also supporting priority sectors such as real estate and capital markets.

Experts explained, "The PBoC’s structural financial policy tools mainly aim to guide financial institutions to strengthen support for major strategies, key sectors, and weak areas. In these sectors, the initial willingness of social capital to enter is relatively low, so funds from the PBoC are first allocated to play a guiding role." (Edited by KS)

People's Daily Online Japanese Edition, 16 January 2026