The People’s Bank of China recently released the “China Monetary Policy Implementation Report for the First Quarter of 2024”, shedding light on the country’s financial strategy in the face of a slowdown in financing growth. The report emphasized the need to shift focus from the quantity of monetary policy to the price, stressing that the current low prices are due to insufficient demand in the real economy rather than a shortage of money supply.
General Secretary Xi Jinping’s previous statements regarding the importance of controlling the currency in deleveraging efforts were referenced in the report. The central bank aims to stabilize and reduce corporate financing and residents’ credit costs through reforms in the loan market quotation rate and market-based adjustment mechanisms of deposit interest rates.
The subsequent financial data statistical report for April 2024 reflected a significant decrease in new social financing, with the growth rate of social financing stock hitting a record low. Government bond issuance slowed down, credit financing weakened, and direct corporate stock and bond financing also saw a decline. The report highlighted the issue of insufficient effective demand for credit, as loans to the residential sector shrank and the growth rate of money supply hit historic lows.
The report was authored by Zhong Zhengsheng, a columnist for Fortune Chinese website and chief economist of Ping An Securities. The insights provided in the report are the author’s independent opinion and do not represent the official stance of Fortune Chinese. The editorial oversight was provided by Liu Lanxiang.