The People's Bank of China (PBOC) released its quarterly policy implementation report on Friday, stating that China's economy is expected to rebound in 2023 and the monetary policy will be precise and forceful.

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The PBOC aims to support domestic demand expansion and stabilise economic growth and prices while avoiding "flood-like" stimulus, as per the report.

Despite the expected rebound in 2023, the report notes that the external environment remains "severe and complex", and the basics of domestic economic recovery are "not yet solid".

The report also acknowledges that the property sector requires time to transition, and local governments face pressure in balancing fiscal revenue and expenditure.

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To address these challenges, China will closely monitor inflation and keep energy and food prices stable. The PBOC will maintain ample liquidity and effective credit growth while also improving social expectations and boosting confidence in the economy, employment, and prices.

The report has not undergone significant changes from the previous one. However, markets are anticipating a government reshuffle, particularly of the economic team, and the announcement of economic targets and policies for 2023 during an annual parliamentary meeting that is set to begin on March 5.

Premier Li Keqiang stated at a cabinet meeting on Wednesday that the world's second-largest economy is stabilising and improving, but still faces many challenges. China's economic growth slowed to one of the worst levels in half a decade due to stringent COVID-19 lockdowns and curbs in 2022.

The central bank also made a commitment to enhance social outlook and increase trust, with a primary emphasis on stabilsing the economy, employment, and prices.

The PBOC has acknowledged the property sector's fragile state and has stated that it will fulfill appropriate financing needs in the sector. However, it also stated that real estate cannot be used as a short-term measure to boost the economy.

On Friday, the PBOC and regulators for banking and insurance issued a notification to encourage commercial banks to provide loans for rental housing groups to purchase housing.

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