China will implement a sound monetary policy that is more precise and effective, maintain steady credit expansion and encourage financial institutions to further reduce real lending interest rates, said a report from the State Council on financial work.

Enterprises' comprehensive financing costs and households' consumption credit costs will be alleviated while stability within the deposit and loan market will be maintained, Pan Gongsheng, governor of the People's Bank of China, the country's central bank, said while delivering the report, which was submitted on Saturday for deliberation at a session of the Standing Committee of the National People's Congress.

The financial sector will make continuous efforts to better serve the real economy, Pan said, including beefing up support for the delivery of presold housing units and strengthening financial services for private enterprises, advanced manufacturing sectors, strategic emerging industries and tech-based firms.

Delivering the report, Pan also pledged to proactively address financial risks, with a mechanism to be established to resolve debt risks among local government financial vehicles (LGFVs). Financial institutions will be guided to support LGFV risk resolution according to laws and regulations.

"Reasonable financing needs of real estate enterprises will be supported without discrimination to keep financing of the property sector stable," Pan said.

Zhang Jun, chief economist at China Galaxy Securities, said the report sends a positive signal that better-than-expected economic growth figures for the third quarter are unlikely to trigger a tapering of monetary policy support, with another cut in the reserve requirement ratio possible in the current quarter.

Zhang said that government bond issuances have sped up since October amid proactive fiscal support and pushes for LGFV debt resolution. This may require an RRR cut — which releases funds lenders must hold as reserves — to maintain ample liquidity in the banking system.

Given that the country's low inflation levels may keep real interest rates relatively high, further cuts in policy benchmarks for interest rates are also necessary, which may take place in 2024 when downward pressure on the renminbi against the US dollar fades as US monetary policy tightening is expected to end, Zhang said.

The real interest rate is the difference between the nominal or stated interest rate and the inflation rate in order to remove inflationary effects. Rising real interest rates indicate that borrowers need to pay more in the form of goods or services to repay their debts.

According to the report, progress has been made in alleviating market entities' financing costs this year as the weighted average interest rate of corporate loans in September stood at 3.82 percent, the lowest ever recorded in the country.

Official data also show that more than 22 trillion yuan ($3 trillion) in existing mortgages have had interest rates reduced so far, with an average interest rate reduction of 0.73 percentage points, benefiting about 50 million households and 150 million people.

Interest expenses worth 160 billion yuan in total are saved per year, which means that each household will see savings of an additional 3,200 yuan per year on average.

The latest report was part of repeated policy signals that the PBOC is poised to consolidate the country's economic recovery that has been picking up. During a two-day meeting earlier this month of the International Monetary and Financial Committee of the International Monetary Fund in Morocco, Pan said positive factors in China's economic performance have increased with an uptick in industrial production, services activity and market sales.

The country's monetary policy will provide continuous support and ride the improvement in economic momentum, with aggregate and structural monetary tools to be better leveraged to expand domestic demand, boost expectations and provide more substantial support for the real economy, Pan said.

China will also pay more attention to the balance between economic growth and sustainability, and actively promote high-quality, sustainable development while maintaining a reasonable growth rate, he added.