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The move shows that China's monetary policy is slightly relaxed under the "stable" tone, but adjustments within the limits are not a precursor to China's large-scale stimulus.
China’s monetary policy has entered the “stable†state in 2008 after “tightening†in 2008 and “moderately loose†in 2009 and 2010. Zhou Xiaochuan, governor of the People's Bank of China, said at a press conference held at the Shanghai headquarters of the central bank that the monetary policy of the People's Bank of China is in a state of steadily and slightly loose, and it is necessary to constantly observe timely and dynamic adjustments.
“Stable and slightly loose†is the new view of the state of monetary policy proposed by the central bank for the first time.
There are five broad categories of monetary policy descriptions: lenient, moderately lenient, steady, moderately tight, and tight. The coverage of these five categories is relatively large. In each category, there can be flexibility adjustments from left to right, but switching from one formulation to another requires a high threshold.
The dynamic adjustment of monetary policy was also a requirement of the Central Economic Work Conference at the end of last year. Only a flexible and moderate monetary policy can create a suitable monetary and financial environment for structural reforms, reduce financing costs, maintain a reasonable liquidity and moderate growth in social financing.
China will not stimulate the economy on a large scale. This judgment is based on the “upgrade†of China’s regulatory measures and “no need†for domestic and international economic fundamentals.
On the one hand, China's “toolbox†still has a certain monetary policy space for possible economic downside risks. Adhering to the "regular control" and "directed regulation" regulation has become a macro-management innovation method used by the Chinese government in the normal period of economic transformation and upgrading, and it is a "smart regulation" that is different from the traditional macro-control ideas.
Interval regulation can be roughly described as: according to the economic development potential and current actual conditions, scientifically determine the reasonable range of economic operation, and ensure that economic growth does not break through the "lower limit" of employment protection without taking short-term strong stimulus measures, CPI does not break through. The "upper limit" against inflation.
Directional regulation means that under the premise of maintaining the basic orientation of macroeconomic policies, this "lower limit" and "upper limit" are used as warning lines, taking into account the current and long-term, and adopting pre-adjustment and fine-tuning measures to stimulate market vitality and increase public goods. Effectively supply and support the development of the real economy.
On the other hand, the fundamentals of China's economic development have not changed for a long time, and the economic growth rate is still operating in a reasonable range, which is in line with the potential growth rate of 6%-7%. Although the growth rate has slowed down, the new economic growth model It can guarantee the development of China's economy more healthily and steadily; and the global economy is only a stage of “new mediocrity†that has entered a low-speed development. There is no possibility of major turmoil and crisis. There is no need for China to respond with strong stimulus.
At the 2015 annual meeting of the World Economic Forum, Chinese Premier Li Keqiang made it clear that China will continue to maintain its strategic strength, implement a proactive fiscal policy and a prudent monetary policy, and will not engage in “big flood irrigationâ€, but will pay more attention to pre-adjustment. Fine-tuning, better implementation of directional regulation.
Strategic determination, where is the fixed tone of the work. Stable, that is, the macro policy should be “stable†and not strong; the development situation should be basically stable and the bottom line of risk should be maintained. Progress is not to pursue high growth, but to pursue quality and efficiency and pursue structural optimization.
In this context, observing the central bank's previous RRR cuts and interest rate cuts since the end of 2011 should not be regarded as a major currency “stimulus policyâ€. In particular, the “comprehensive + orientation†approach to RRR reduction, on the one hand, implements pre-adjustment in terms of macro-control, and on the other hand reflects the intention of structural support and orientation adjustment to enhance financial support for weak economic links. This "combination boxing" is a reflection of China's prudent monetary policy and has not changed the moderate fundamentals.
The central bank said that the RRR cut aims to maintain a reasonable and sufficient liquidity in the financial system, guide the steady and moderate growth of money and credit, and create a suitable monetary and financial environment for supply-side structural reform.
Economists generally believe that the RRR cut is expected, mainly to hedge the need for a decline in foreign exchange holdings, and to provide sufficient liquidity for the development of the real economy.
In November last year, the Central Financial and Economic Leading Group provided the first structural reform. At the end of last year, the Central Economic Work Conference emphasized that the structural reform of the supply side should be promoted, and the five major tasks of de-capacity, de-stocking, deleveraging, cost reduction, and short-boarding should be grasped to set the tone for China's economic development this year.
A distressed enterprise, if it starts from the traditional way of thinking, or will continue to increase investment, expand its scale and even increase its employees, and increasingly high capital, land and labor costs will invade profits, the more losses the more production; Starting from the supply-side reform, it will strengthen technological innovation, improve capital efficiency, upgrade and even create new products to stimulate new demand.
At present, China is pushing forward supply-side reforms and actively liberalizing market access. Promoting mass entrepreneurship and innovation, high-tech industry development, and economic restructuring and upgrading all require an appropriate monetary and financial environment to support it.
From the data point of view, China's credit scale has indeed expanded compared with five years ago, but from the perspective of the rapidly growing economic scale and volume, the credit ratio has not changed much, and should not be a simple comparison of absolute values. Since the overall tone of the “stable monetary policy†remains unchanged, the adjustment of the moderately moderate monetary liquidity will not change, and the scale of monetary credit and social financing will continue to maintain steady and moderate growth.
This year's infrastructure investment and real estate investment trends have shown a steady development trend. China's mainstream economists predict that China's economic growth rate will continue to face downward pressure in the context of slowing investment this year, but the decline will slow down, and the economic growth rate will still be between 6.5% and 7%.
The party said that China will still not stimulate the economy on a large scale.
Abstract The People's Bank of China officially lowered the deposit reserve ratio of financial institutions by 0.5 percentage points on March 1. This is the first time the central bank has lowered its quota this year, and it has also been lowered for the first time in four months since October 24, 2015. This move shows that China’s monetary policy is “stable...
The People's Bank of China officially lowered the deposit reserve ratio of financial institutions by 0.5 percentage points on March 1. This is the first time the central bank has lowered its quota this year, and it has also been lowered for the first time in four months since October 24, 2015.