According to Xinhua, after China's State Council executive meeting set the policy direction, the People's Bank of China (PBOC), the Ministry of Finance and the National Financial Regulatory Administration jointly rolled out a new stable-growth policy package on September 29, described by markets as the central bank firing "four arrows" of monetary policy tools. This follows a series of incremental policies issued earlier this year, with Beijing again stepping up growth-support measures just ahead of the National Day holiday, aiming to consolidate the foundation of economic recovery and hedge against uncertainty in the external economic environment. The new package covers a cut to the Pledged Supplementary Lending (PSL) rate, an expansion of PSL support areas, increased structural re-lending quotas, and a residential mortgage interest subsidy policy effective from October 1, 2026 — several measures landing simultaneously, underscoring the urgency and coordination behind the push.

On the monetary-tool front, the PBOC announced a 0.25-percentage-point cut to the one-year Pledged Supplementary Lending (PSL) rate, bringing it down from 1.75% to 1.5% — another reduction in the PSL rate this year, aimed at lowering the threshold for financial institutions to access low-cost funding and, through the transmission mechanism, pushing down overall social financing costs. At the same time, the central bank decided to expand PSL's support scope to cover major infrastructure under the so-called 'six networks' — water networks, new-type power grids, computing-power networks, next-generation communication networks, urban underground pipe networks, and logistics networks. Analysts note this shift means the PSL tool, originally designed mainly to fund shantytown renovation and major water-conservancy projects, has gradually expanded to support new infrastructure tied to the digital economy, computing infrastructure and new-style urbanization — reflecting how the policy toolkit is being updated alongside China's economic restructuring.

On structural re-lending, the PBOC simultaneously increased the quota for science-and-technology innovation and technological-transformation re-lending by 200 billion yuan, while raising the support ratio for loans issued by financial institutions under this scheme from 60% to 100% — expanding the total quota for this facility from 1.2 trillion yuan to 1.4 trillion yuan. At the same time, the quota for agriculture- and small-business-support re-lending was increased by 500 billion yuan, and the quota for inclusive micro, small and private-enterprise re-lending rose by a further 300 billion yuan, lifting the combined total from 4.35 trillion yuan to 4.85 trillion yuan. Officials said these adjustments are meant to steer financial institutions toward greater lending to technology firms, advanced manufacturing, and small, micro and private enterprises, easing their difficulty and high cost of financing and supporting capital needs in the real economy, particularly in technological innovation and inclusive finance.

On the mortgage interest subsidy, the Ministry of Finance, the PBOC and the National Financial Regulatory Administration jointly issued a notice on September 29 confirming that a residential mortgage interest subsidy policy would take effect formally from October 1, 2026, with the policy period provisionally set at one year. Under the notice, the loan amount eligible for the subsidy is capped at 1 million yuan per household, with fiscal authorities providing an annualized subsidy of 1 percentage point on the loan principal for a term of up to five years, disbursed directly to qualifying homebuyers through the handling banks. The policy is seen as a continuation of the package of real-estate measures China has rolled out since earlier this year, aimed at lowering the real interest burden on first-time and upgrade homebuyers, boosting housing consumption demand, and helping keep the property market broadly stable during its adjustment period.

This policy package is closely tied to the macroeconomic tone China set earlier this year. The government work report set China's 2026 GDP growth target at a range of 4.5% to 5%, the third time officials have used a range format for the growth target, to build in policy flexibility for handling domestic and external uncertainty. The report also stated that general public budget spending would reach around 30 trillion yuan for the first time, the fiscal deficit ratio would be set at around 4%, and 1.3 trillion yuan in ultra-long-term special treasury bonds would be issued to continue supporting major project construction and trade-in programs for consumer goods, providing fiscal backing for the economy through the year. Official documents noted that the current international situation is complex and volatile, geopolitical risks are intensifying, global trade protectionism and tariff barriers are on the rise, and the International Monetary Fund forecasts global growth of only around 3.3% in 2026. Domestically, deepening population aging, tightening resource and environmental constraints, and the difficult task of shifting from old to new growth drivers all form part of the real backdrop behind this latest round of stable-growth measures.

Market analysts say this round of 'four arrows' continues the pattern seen throughout the year of China's macro policy moving 'ahead of the curve and stepping up continuously,' representing a concrete example of coordinated monetary and fiscal action following the State Council executive meeting's deployment of incremental policies. Research reports from multiple institutions note that the PSL rate cut and expanded support scope will help lower financing costs for infrastructure and new-style urbanization projects, opening room for effective investment, while the substantial expansion of re-lending quotas for tech innovation and for agriculture and small businesses directly targets the financing pain points of small, micro and tech enterprises, aiming to clear the 'last mile' of monetary policy transmission. The mortgage interest subsidy, as a new attempt at coordinating fiscal and financial policy, is seen as precision targeting of demand-side housing policy, with some analysts expecting it to boost near-term homebuying intent among first-time and genuine-need buyers in first- and second-tier cities. Overall, this policy package reflects Chinese policymakers' continued use of precisely targeted structural tools under pressure from the external economic environment, in an effort to meet the full-year growth target — with whether fiscal and monetary policy can generate even greater combined force going forward remaining a key focus for the market.

Notably, this round of 'four arrows' relies mainly on structural monetary policy tools rather than a broad-based cut to reserve requirements or benchmark rates. The Loan Prime Rate (LPR) has held steady for several months since mid-year, with the one-year LPR at 3.0% and the over-five-year LPR at 3.5%, even as markets had widely expected a broad rate or reserve-ratio cut to be rolled out at some point this year. The Central Economic Work Conference held late last year set the tone for 2026 monetary policy as continuing to be 'moderately loose,' emphasizing that promoting stable economic growth and a reasonable rebound in prices would be key considerations for monetary policy, and writing into the policy tone a pledge to 'flexibly and efficiently use reserve-ratio cuts, rate cuts and other policy tools.' Against this backdrop, the central bank's choice to act precisely through structural tools rather than aggregate ones this time is widely interpreted as leaving room for a possible broad reserve-ratio or rate cut later, while using targeted tools in the meantime to ease financing pressure in key areas — reflecting a policy approach of 'appropriate aggregate scale, precise structure.' Research teams at several brokerages said they would continue watching for further reserve-ratio or LPR cuts in the fourth quarter or early next year.