People's Bank of China
The People's Bank of China (officially PBC[3] and unofficially PBOC[4]) is the central bank of the People's Republic of China.[5] It is responsible for carrying out monetary policy as determined by the People's Bank Law and the Commercial Bank Law.
Headquarters
December 1, 1948
US$3.31 trillion (2022)[1]
7.6% (March 2023)[2]
3.5% (August 2023)
中国人民银行
中國人民銀行
China People Bank
Zhōngguó Rénmín Yínháng
Zhōngguó Rénmín Yínháng
ㄓㄨㄥㄍㄨㄛˊ ㄖㄣˊㄇㄧㄣˊ ㄧㄣˊㄏㄤˊ
Jonggwo Renming Ynharng
Chung1kuo2 Jen2ming2
yin2hang2
Jung1gwo2 ren2min2 yin2hang2
Jūnggwok Yàhnmàhn Ngàhnhòhng
Zung1gwok3 Jan4man4
Ngan4hong4
人民银行
人民銀行
People Bank
Rénmín Yínháng
Rénmín Yínháng
ㄖㄣˊㄇㄧㄣˊ ㄧㄣˊㄏㄤˊ
Renmin Ynharng
Jen2ming2 yin2hang2
Ren2min2 yin2hang2
Yàhnmàhn Ngàhnhòhng
Jan4man4 ngan4hong4
央行
Central Bank
Yāngháng
Yāngháng
IangHarng
Yang1hang2
Yang1hang2
Yēunghòhng
Joeng1hong4
ཀྲུང་གོ་མི་དམངས། མི་རྣམས།དངུལ་ཁང་།
Krung go mi dmangs
Mi rnams Dngul khang
Krung go mi dmangs
Mi rnams Dngul khang
Cunghgoz Yinzminz Yinzhangz
Дундад Улсын Ардын Банк
ᠳᠤᠮᠳᠠᠳᠤ
ᠤᠯᠤᠰ ᠤᠨ
ᠠᠷᠠᠳ ᠤᠨ
ᠪᠠᠩᠬᠢ
Dundad Ulsyn Ardyn Bank
Dundad Ulsyn Ardyn Bank
جۇڭگو خەلق بانكا
Junggo Xelq Banka
Junggo Xelq Banka
Җуңго Хәлқ Банка
Banco Popular da China
The PBC was established in 1948 and became China's sole central bank after the founding of the People's Republic of China in 1949. From 1969 to 1978, the PBC was demoted to a bureau of the Ministry of Finance. The PBC was extensively reformed during the 1990s, when its provincial and local branches were abolished, instead opening nine regional branches. In 2023, these reforms were reversed as when the regional branches were abolished and the provincial branches restored, and new arrangements essentially ended the PBC's longstanding role in financial supervision.
The PBC is the 25th-ranked of 26 ministerial-level departments of the State Council, right ahead of the National Audit Office. The PBC lacks central bank independence, and is required to implement the policies of the Chinese Communist Party (CCP) under the direction of the party's Central Financial Commission. The PBC is led by a Governor assisted by several Deputy Governors and a CCP Committee Secretary. Since 2023, the roles of Governor and CCP Committee Secretary have been held jointly by Pan Gongsheng.
History[edit]
Mao era[edit]
The bank was established on December 1, 1948, based on the consolidation of the Huabei Bank, the Beihai Bank and Northwestern Farmers' Bank.[6]: 37 The headquarters was first located in Shijiazhuang, Hebei, and then moved to Beijing in 1949. Between 1950 and 1978 the PBC was the only bank in the People's Republic of China and was responsible for both central banking and commercial banking operations.[7]: 225 All other banks within mainland China such as the Bank of China were either organized as divisions of the PBC[8] or were non-deposit taking agencies.[9][10]
From 1952 to 1955 government shares were added to private banks to make state-private banks, until under the first Five Year plan from 1955 to 1959 the PBC had complete control of the private banks, making them branches of the PBC, closely resembling the vision of Vladimir Lenin. With aid from the Soviet Union, the shares of private enterprises and with them industrial output followed a similar path, forming a Soviet-style planned economy.
During the Cultural Revolution, the PBC suspended its commercial banking service.[6]: 38 In June 1969, the State Council approved the consolidation of PBC's headquarters as a bureau within the Ministry of Finance.[6]: 38 In that context, the PBC's head office was downsized to no more than eighty staff.[5]: 58 Local PBC branches were correspondingly merged into local government finance departments.[6]: 38
Early reform era[edit]
The institutional demotion of the PBC was reversed in March 1978 as it was separated from the Finance Ministry and granted ministerial ranking.[5]: 62
By then and with the exception of special allocations for rural development, the monolithic PBC dominated all business transactions and credit. In 1979, China initiated a transition from that single-tier banking system to a two-tier system, which was largely completed by 1984.[11]: 188–189 In March 1979, as part of the Chinese economic reforms, the State Council split off state-owned banks from the PBC, first the Agricultural Bank of China (ABC) and the Bank of China (BOC). The People's Construction Bank of China, which had been run separately under the Ministry of Finance, was also made autonomous (and later renamed China Construction Bank in 1986). In January 1984, the PBC's own commercial banking operations were spun off as the Industrial and Commercial Bank of China (ICBC).[5]: 63 [12] In September 1983, the State Council had promulgated that the PBC would function exclusively as the central bank of China and no longer undertake commercial banking activities.[6]: 42
Modernization efforts continued in the late 1980s and early 1990s. In 1990, the PBC moved into its new head office building, prominently located on West Chang'an Avenue.[13]: 47 In 1991, vice governor Chen Yuan spearheaded the creation of the Electronic Interbank System (EIS), the PBC's first state-of-the-art financial market infrastructure.[5]: 285 In 1992, however, the PBC had to reluctantly concede the spinning off of its securities regulatory duties to the newly established China Securities Regulatory Commission,[5]: 149 whose first chair was former PBC vice governor Liu Hongru.
The bank's profile was greatly raised by the appointment of Zhu Rongji as its Governor in 1993, simultaneously as his role as Vice Premier in charge of economic and financial affairs.[5]: 125 . Its central bank status was legally confirmed on March 18, 1995, by the 3rd Plenum of the 8th National People's Congress, and was granted a higher degree of autonomy than other State Council ministries by an act that year.[11]: 203 In 1996 and 1996, the PBC established fundamental regulations on loans and consumer credit.[14]: 20
In 1998, the PBC underwent a major restructuring. All provincial and local branches were abolished, and the PBC opened nine regional branches, whose boundaries did not correspond to local administrative boundaries.[15] The nine branches were located in Chengdu, Guangzhou, Jinan, Nanjing, Shanghai, Shenyang, Tianjin, Wuhan, and Xi'an, complemented by a sub-provincial network of city-level and county-level sub-branches.[5]: 144 That same year, the so-called credit plan, a key feature of China's former state planning process, was finally abandoned, allowing the PBC to play a genuine role as monetary policy authority.[5]: 99
21st century[edit]
In 2003, the Standing Committee of the National People's Congress approved an amendment law for strengthening the role of PBC in the making and implementation of monetary policy for safeguarding the overall financial stability and provision of financial services. That year, the long overdue restructuring of China's banking sector made major progress with the creation of Central Huijin Investment, a PBC-managed fund that allowed the PBC to take the lead from the Ministry of Finance on the restructuring process and from the CCP Central Organization Department on the appointment of senior bank executives.[5]: 279-281 That same year, however, the PBC reluctantly lost its direct authority over banking supervision with the creation of the China Banking Regulatory Commission.[5]: 149
In 2005, the PBC elevated its branch in Shanghai to the status of "second head office", in a move intended to mirror the prominent market-facing role of the Federal Reserve Bank of New York within the US Federal Reserve System.[5]: 123 In 2006, the PBC established the Credit Reference Centre to provide financial credit reporting.[14]: 47 In 2008, the PBC lost the direct ownership stakes it had built up in much of China's financial sector as the ownership of Central Huijin was transferred to the China Investment Corporation (CIC), a newly created sovereign wealth fund.[5]: 287
During the Great Recession, the PBC helped address bank liquidity crisis by signing swap agreements with numerous other countries to provide them with liquidity based on the renminbi.[16]: 267 As of 2021, China has swap agreements with 40 countries.[16]: 271
In 2010, the PBC issued administrative measures regarding online non-financial payment services.[17]: 33 These measures retroactively recognized the legal status of online third-party payment platforms like Alipay.[17]: 33 Prior to the 2010 measures, these services existed in a legal grey area.[17]: 32
In 2015, the PBC hosted China's first formal deposit insurance scheme.[18] In 2019, this scheme was reorganized as a subsidiary of the PBC, the Deposit Insurance Fund Management Company.[19] Meanwhile, in 2017, the PBC was tasked with the secretariat of China's newly established Financial Stability and Development Committee chaired by Vice Premier Liu He. In 2020, the PBC initiated supervision of significant financial holding companies.[20]: 6–7
The PBC underwent through another major restructuring in 2023, with the abolition of the nine regional branches established in 1998, which had already seen their authority watered down by a change in 2004 that had returned authority to the PBC's branches at the provincial level and further changes in 2018.[21][15] Additionally, the PBC's county-level branches were absorbed by city-level branches.[22] The new branches were inaugurated on August 18, 2023.[23] The oversight over financial holding companies and financial consumer protection was also transferred from the PBC to the newly established National Financial Regulatory Administration (NFRA).[22] Around 1,600 county-level branches of the PBC are planned to be absorbed to the NFRA; the PBC had 1,761 such branches at the end of 2021.[24]
