China’s central bank pledges stability in capital markets amid global sell-off
With worries over the Iran war driving down stock prices, the People’s Bank of China has named market stability as a ‘major task’ in 2026
China’s central bank named the continued stability of the country’s capital markets as a priority for 2026, a goal taking on greater significance as global markets are tested by the reverberations of the escalating US-Israel war on Iran.
Published on Thursday, the statement arrived at a turbulent moment for Chinese equities. By market close that day, the benchmark Shanghai Composite Index had dropped 1.39 per cent – hovering just above the 4,000-point mark – with nearly 5,000 stocks on mainland China’s exchanges ending the day at a loss.
“For all central banks, there can be an adverse scenario where a more persistent supply shock feeds through to underlying inflation while still weighing on demand,” said Jennifer McKeown, chief global economist at Capital Economics, in a note on Tuesday.
She noted that a gradual tightening of policy, complemented by targeted fiscal support for households and firms, is typically the most appropriate way to anchor inflation expectations without further suppressing economic demand.