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Xinhua News Agency, Beijing, May 7th. Topic: Monetary policy to stabilize the economy and go all out to bail out market players——Interview with Chen Yulu, Deputy Governor of the People’s Bank of China
Xinhua News Agency reporter Wu Yu
At present, the economic situation at home and abroad is complex and severe, the economy is facing new downward pressure, and the difficulties of market players have increased significantly. Amid multiple challenges, how can monetary policy help stabilize growth? How can financial measures support the development of bail-out by market players? How are financial markets responding to the impact of a shift in monetary policy in advanced economies? Chen Yulu, deputy governor of the People’s Bank of China, recently accepted an interview with a reporter from Xinhua News Agency.
A prudent monetary policy is deployed ahead of time
Q: In order to achieve economic and social development goals, how should monetary policy respond to stabilize growth?
A: In response to the more complex and severe domestic and international economic situation, since the beginning of this year, the People’s Bank of China, in accordance with the decisions and deployments of the CPC Central Committee and the State Council, has deployed ahead of schedule and exerted efforts to increase the implementation of a prudent monetary policy to effectively support the stabilization of the macroeconomic market. .
The first is to cut the reserve ratio in a forward-looking manner, maintain a reasonable and sufficient liquidity in the aggregate, and maintain sufficient support for the real economy. At the end of last year, the People’s Bank of China made an early effort to reduce the RRR by 0.5 percentage points across the board, and recently further lowered the RRR by 0.25 percentage points to increase financial institutions’ long-term stable funding sources and increase liquidity.
The second is to continue to guide the interest rate in the loan market to decline and improve the transmission efficiency of monetary policy. Since the beginning of this year, under the background of the continuous interest rate hike by the Federal Reserve, my country’s 1-year loan market quoted rate (LPR) and 5-year LPR have fallen by 0.1 percentage points and 0.05 percentage points, respectively, in order to guide the loan interest rate to decline and stimulate the market. main financing needs. In addition, we also lowered the re-lending rate for supporting agriculture and small businesses by 0.25 percentage points in a timely manner.
The third is to actively make good use of the structural monetary policy during special periods, focusing on supporting the manufacturing industry, the service industry affected by the epidemic, and small and micro enterprises to reduce their burdens and provide relief. A few days ago, we have converted two monetary policy tools that directly reach the real economy into market-oriented policy tools to support small and micro enterprises. Recently, we have launched three major special re-loans, including 200 billion yuan in technological innovation re-loans, 40 billion yuan in inclusive pension special re-loans, an increase of 100 billion yuan in re-loans to support the development and use of coal and the enhancement of energy storage, and more Support for key areas and weak links.
Fourth, maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. Recently, in response to market demand, we have effectively prevented significant fluctuations in the RMB exchange rate by reducing the foreign exchange deposit reserve ratio of financial institutions by 1 percentage point, increasing the supply of foreign exchange, and strengthening the management of exchange rate expectations.
In particular, it should be pointed out that this year the People’s Bank of China has handed over over 1 trillion yuan of surplus profits in accordance with the law, which has directly enhanced the financial resources available to the government and effectively guaranteed the intensity of fiscal expenditures. After the profits handed over by the central bank are financed, they will sink to the grassroots level and go directly to market players. It is expected to drive the growth rate of broad money (M2) in 2022 by about 0.5 percentage points.
Q: In the next stage, how to increase the support of the prudent monetary policy to the real economy?
A: The People’s Bank of China will follow the deployment of the Political Bureau of the CPC Central Committee on April 29, and in accordance with the requirements of preventing the epidemic, stabilizing the economy, and ensuring security in development, put stable growth in a more prominent position, and give better play to the role of monetary policy. , increase support for the real economy, stabilize market expectations, stabilize market players, stabilize prices, stabilize employment, strive to achieve annual economic and social development goals, and keep the economy operating within a reasonable range.
The first is to launch 100 billion yuan of re-loans as soon as possible to support corporate financing such as logistics and warehousing, strengthen assistance to freight operators, and provide stronger financial support for coordinating epidemic prevention and control and economic and social development.
The second is to increase support for banks, especially small and medium-sized banks, to issue perpetual bonds, support the improvement of bank capital levels, and enhance bank credit issuance capabilities.
The third is to promote financial institutions to continue to reduce fees, benefit enterprises and the people, give better play to the role of government financing guarantees, and use market-based and law-based methods to promote financial institutions to reasonably transfer profits to the real economy.
Continue to introduce new measures to support the development of market players
Q: The meeting of the Political Bureau of the CPC Central Committee requires that market players be stabilized. What package of relief policies has the financial management department issued to industries, small, medium and micro enterprises and individual industrial and commercial households severely hit by the epidemic? What will be the next step to further support the development of bailout by market players?
A: Affected by the current internal and external macroeconomic environment, market entities such as small, medium and micro enterprises and individual industrial and commercial households have increased operational difficulties. The People’s Bank of China resolutely implements the decisions and arrangements of the CPC Central Committee and the State Council, conscientiously implements various financial policies, adheres to the “two unswerving”, and regards supporting small, medium and micro enterprises and individual industrial and commercial households as the top priority to support the high-quality development of the real economy. Plans to continue to introduce new financial support measures.
Recently, the People’s Bank of China and the State Administration of Foreign Exchange have issued 23 package measures to help enterprises with financial assistance. These are all targeted policies in response to the general concerns of market players. On the whole, with the continuous increase of financial support, the effect of the policy is gradually showing.
In the next step, the People’s Bank of China will resolutely implement the spirit of the meeting of the Political Bureau of the Central Committee, urge financial institutions to make good use of various financial policies, and take the initiative to serve the real economy. The focus is to speed up the implementation of the established policy measures, proactively plan incremental policy tools, go all out to support the bailout and development of market entities, and help small, medium and micro enterprises and individual industrial and commercial households tide over the difficulties. For example, for enterprises in difficult industries such as catering, cultural tourism, etc., speed up the development of movable property mortgages and credit loan products; for groups seriously affected by the epidemic, flexibly take reasonable measures such as delaying repayment time, extending loan period, and delaying principal repayment to support ; For highway logistics, transportation and warehousing and other enterprises, accelerate the implementation of the 100 billion yuan re-lending policy, and reasonably support the extension or renewal of car loans; for “specialized, special and new” small and medium-sized enterprises and other technology enterprises, accelerate the implementation of 200 billion yuan in technological innovation re-lending implement. At the same time, it is necessary to continue to promote the construction of a long-term mechanism for financial services for small and micro enterprises “dare to lend, willing to lend, able to lend, and meeting loans”, optimize the allocation of credit resources, strengthen the empowerment of financial technology, and strive to improve the availability of financing for small and micro enterprises and convenience.
Chinese financial markets have very strong long-term attractiveness
Q: Since the beginning of this year, the monetary policy shift in developed economies has accelerated, and the spillover effect on emerging markets has attracted widespread attention. How do you view the impact of this spillover on China’s economy and finance?
A: Since the beginning of this year, the monetary policy shift of developed economies has accelerated, which will inevitably have spillover effects on other economies, especially emerging markets. China’s economic fundamentals are solid and resilient, and it is capable of dealing with such spillovers. One is the steady economic recovery. In 2021, China’s GDP will increase by 8.1% year-on-year, with an average growth rate of 5.1% in the two years, ranking among the top among the world‘s major economies. In the first quarter of this year, China’s GDP increased by 4.8% year-on-year, 0.8 percentage points higher than that in the fourth quarter of last year, and achieved a stable start. Second, consumer prices rose moderately. In 2021, China’s consumer prices will increase by 0.9% year-on-year, compared with 1.5% in March this year, and inflationary pressures are generally controllable. The third is the continuous optimization of the economic structure. The driving effect of domestic demand has increased, and the contribution rate to economic growth in the first quarter is 96.3%, higher than 79.1% in 2021. In the first quarter, the added value of high-tech manufacturing above designated size increased by 14.2% year-on-year, and the growth rate was 7.7 percentage points higher than that of all industries above designated size.
The Chinese financial market still has a very strong long-term attractiveness for international investors. On the one hand, compared with developed economies, China’s real return on assets is still relatively high, which is determined by China’s potential economic growth rate and natural interest rate. Higher investment returns are still an important attraction for China’s financial market. On the other hand, the Chinese financial market is an important target for diversified asset allocation. After the outbreak of the epidemic, thanks to good epidemic prevention and control, China’s economy resumed work and production earlier. The domestic economic and policy cycle is different from other major economies. The People’s Bank of China insists on implementing a normal monetary policy to diversify asset allocation for investors. important channels are provided.
It is worth noting that in recent years, China’s financial industry has made great progress in opening up to the outside world. The two-way opening of the financial market has continued to expand, creating a better environment for foreign investment to enter the Chinese market. The recognition of RMB assets by international investors has also continued to improve. These factors will support the long-term sustainability of China’s financial market. Recently, the volatility of the global treasury bond market has increased, while the Chinese treasury bond market is running very smoothly. This is not only the result of proactive monetary policy and forward-looking operations, but also once again reflects investors’ confidence in the long-term, stable and healthy development of China’s economic and financial markets.
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Responsible editor: Zhao Siyuan