The People’s Bank of China (PBOC) issued an announcement on December 4 stating that to maintain sufficient liquidity in the banking system, it will conduct a 1 trillion yuan buyout reverse repo operation on December 5. The operation has a term of 3 months (91 days) and adopts the method of fixed quantity, interest rate bidding, and multi-price winning bids. This trillion-yuan liquidity injection is an important measure for the central bank to strengthen cross-cyclical adjustment recently.

From a market perspective, since December, the banking system has faced liquidity demand pressures such as tax payment periods and the maturity of Medium-term Lending Facility (MLF). This reverse repo operation accurately offsets the liquidity gap. Data shows that the PBOC’s financial data performed strongly in November: M2 increased by 8.7% year-on-year, and new RMB loans reached 1.8 trillion yuan, exceeding market expectations. This liquidity injection will further consolidate the steady growth momentum of money and credit. Meanwhile, the manufacturing Purchasing Managers’ Index (PMI) rose to 50.2% in November, returning to the expansion range, and the Consumer Price Index (CPI) turned from a decline to an increase of 0.2% month-on-month, indicating that the momentum of economic recovery continues to strengthen.

This operation sends a clear signal of stabilizing growth and forms a policy synergy with the recent capital market reforms. On December 4, China’s A-share market bottomed out and rebounded, with the ChiNext Index rising by over 1%, and high-end manufacturing sectors such as robots and commercial aerospace performing actively. Institutional analysis believes that the trillion-yuan reverse repo operation will reduce market financing costs and boost corporate confidence. Combined with measures such as the China Securities Regulatory Commission (CSRC) relaxing the equity incentive ratio for listed companies and the Shanghai Stock Exchange launching CSI 50 ETF options, it will drive the economy into a positive cycle of “improving data + policy support”.