Following the removal of the phrase "intensify incremental policy implementation" from the PBOC's Q3 monetary policy committee meeting, market expectations for aggressive broad-based monetary easing this year have cooled. Instead, the focus has shifted to effectively implementing existing policies as a priority for the next phase of monetary policy.
On the evening of November 11, the PBOC released its Q3 2025 China Monetary Policy Implementation Report (hereafter "the Report"), signaling another important marginal change in policy direction. The central bank stated it will maintain appropriately accommodative monetary policy while keeping overall financing conditions relatively loose. It emphasized adapting to economic and financial developments by conducting both counter-cyclical and cross-cycle adjustments to sustain a favorable monetary environment.
Notably, this marks the first mention of "cross-cycle adjustment" in five quarters, with the last reference appearing in the Q1 2024 report. This phrasing aligns with the CPC Central Committee's proposals for the 15th Five-Year Plan released on October 28, which explicitly called for "strengthening counter-cyclical and cross-cycle adjustments" to achieve stable growth, employment, and expectations.
Analytically, counter-cyclical measures address short-term economic disruptions through timely counteractive policies, while cross-cycle adjustments employ systemic thinking to ensure long-term economic health and orderly growth by addressing structural factors.
Tian Xuan, Vice Dean of Tsinghua University's PBC School of Finance, explained that counter-cyclical tools smooth short-term fluctuations, whereas cross-cycle adjustments incorporate medium-to-long-term development considerations, balancing cyclical volatility with structural reforms. Multiple chief economists interpreted the PBOC's dual emphasis as signaling greater policy weight toward long-term structural optimization while still addressing near-term economic fluctuations.
The Report's macroeconomic outlook section reiterated the need to coordinate short-term growth with medium-to-long-term development, promote endogenous growth models driven by domestic demand, and deepen key reforms—all while implementing both adjustment approaches.
The concept of cross-cycle adjustment debuted at the July 2020 Politburo meeting, emphasizing policy continuity and sustainability. Commentator Pu Shi previously distinguished the two approaches: counter-cyclical policies reactively employ conventional monetary/fiscal tools, while cross-cycle strategies proactively coordinate multiple policies to resolve structural imbalances.
Liu Xiaoshu, Chief Economist at Qingdao Bank, noted the PBOC's revived emphasis suggests shifting priorities from short-term stabilization to medium-term strategic planning. The parallel phrasing indicates near-term growth remains imperative, but policy bias favors longer-term considerations—strengthening counter-cyclical measures during shocks while focusing on sustainable transformation during recovery periods.
Dong Zhongyun, Chief Economist at AVIC Securities, analyzed that the five-quarter-lapsed terminology reflects policy rebalancing amid current conditions. With Q1-Q3 GDP growth at 5.2%, core CPI up 0.6%, and narrowing PPI declines, stabilization pressures have eased. However, persistent bank margin compression limits further aggressive rate cuts without diminishing returns.
October data showed continued price recovery, with CPI rising 0.2% monthly/annually (core CPI expanding for six straight months) and PPI posting its first monthly gain this year. Dong anticipates the PBOC will follow the Central Economic Work Conference's principle of matching money supply to growth/price targets while dynamically emphasizing cross-cycle adjustments—not altering accommodative stances but likely favoring targeted structural tools over broad-based measures to support the 15th Five-Year Plan's launch.
The Report noted China's resilient Q1-Q3 5.2% GDP growth, with authorities stressing balanced attention to short/long-term needs, risk prevention, and policy implementation amid external uncertainties. Multiple experts concur that with annual targets likely achievable and 500 billion yuan in new policy financing tools deployed, immediate easing urgency has diminished, allowing focus on existing policy execution and cross-cycle preparations.
Zhang Lin of Far East Credit Ratings highlighted constrained monetary effectiveness—including transmission lags and asymmetric impacts near lower-bound rates—while advocating preserved policy space. With slowing real estate and LGFV financing demand, structural tools targeting tech, green, and inclusive finance may prove more impactful than rate cuts.
Wu Chaoming of Wealth Financial Holdings characterized the cross-cycle revival as a rational response to "weak recovery, low inflation, and high transition pressure," favoring precision over blanket stimulus. Such adjustments can reorient focus from quantity targets to price mechanisms and structural optimization while coordinating with fiscal/industrial policies to enhance governance efficacy amid potential monetary "pushing on a string" scenarios.