The China Securities Regulatory Commission (CSRC) promised to stabilize the market and create positive momentum, making stabilization a top priority in 2025 despite a disappointing start this year. Currently, it is cooperating with the People’s Bank of China to upgrade two structural monetary policy tools, while enhancing a mechanism that can stabilize the market.
Currently, Chinese stocks led gains in the region on Tuesday with Shanghai Composite settled 2.54% higher, Shenzhen Composite rose 3.77% and CSI300 closed 2.63% higher, ending its four-day losing streak. Meanwhile, the Hang Seng Index rose 1.83%.
The increase was due to a positive sentiment after a report that Donald Trump’s economic team is discussing an approach to slowly increase the tariffs.
Although unable to clarify how the stabilized mechanism would work, the regulator vowed to implement policy guidance and promptly respond to market concerns.
Nevertheless, CSRC did explain the structural monetary policy tools. The first one is a liquidity support facility that allows institutional investors to ask for funding for stock purchases from the PBOC. While the second one is a swap facility, which is similar to the first one but applies to securities firms, funds and insurance companies.
Governor Pan Gongsheng stated that the initial amount of the tools was 800 billion yuan ($109 billion). However, it may be doubled or tripled in the future, depending on the demand.
Among China’s broad stimulus package presented in September to revive the economy, the formation of a possible state-backed stabilization fund was one of them. However, there has been no update ever since.
