MNI China Press Digest Dec 19: PBOC, Fiscal 2026, Hainan

Highlights from Chinese press reports on Friday:

• China’s central bank conducted CNY100 billion in 14-day reverse repo operations on Dec 18, marking the reactivation of the tool for the first time in three-months, Yicai reports. The DR001—the interbank overnight pledged repo rate for deposit-taking institutions—stabilised this week, fluctuating within a narrow range around 1.27%, after it briefly dipped below 1.3% last week. Analysts said this demonstrates a relatively loose liquidity environment, reflecting the central bank’s efforts to offset potential tightening risks through sustained liquidity injections. “As year-end approaches, the central bank customarily activates 14-day reverse repo operations, mainly because liquidity-disturbing factors such as bank performance assessments, fiscal receipts and expenditures, and increased cash withdrawals by residents tend to intensify around year-end,” said Wang Qing, chief macro analyst at Orient Credit Rating.
• Chief economists interviewed by Yicai broadly agree that fiscal policy support will intensify in 2026, with a more explicit emphasis on “investment in people” and on stimulating consumption. Li Zhan, chief economist at the China Merchants Fund Research Department, projected that the fiscal deficit ratio will rise to between 4.0% and 4.2% in 2026, with the overall deficit expanding moderately from 2025 levels. Li added that fiscal funds will support for major national projects, urban renewal and the development of strategic emerging industries. On the consumption front, several chief economists stressed that service consumption will become a central focus of policy efforts in 2026. Another economist expected the government will raise the quota and broaden its scope of its trade-in subsidy scheme to include services, thereby strengthening consumption-driven growth momentum.
• Hainan province has achieved the basic conditions for island-wide customs closure and operations of the Hainan Free Trade Port have officially commenced, Vice Premier He Lifeng, said at a launch ceremony of the Hainan Free Trade Port, according to the Xinhua News Agency. He said island-wide efforts are needed to deepen reforms in key areas continuously, solidly promote high-quality development, continuously improve risk prevention and build the port into an important gateway to the outside world.