The overall tone of the Q4 cargo policy report remained relatively positive. 1) In terms of currency, it emphasizes "strengthening the counter-cyclical and cross-cyclical adjustment of macroeconomic policies", "promoting the steady and moderate decline of comprehensive social financing costs", and adds "matching the use of a variety of monetary policy tools".Easing policies such as interest rate cuts and structural monetary tools can still be expected. 2) In terms of credit, the emphasis is on "promoting high-quality financial development", replacing "moderate and stable pace of monetary and credit aggregates" from "reasonable growth of financing and monetary aggregates" in the third quarter, combined with the understanding of the central bank on "accurately grasping the law and new characteristics of money and credit supply and demand" and the theory that "only credit increment" cannot be added, as well as the new expression "reasonably grasping the relationship between the two largest financing markets of bonds and credit", the future financing system may focus more on direct financing with the transformation of industrial structureCredit delivery pays more attention to the efficiency of use, and under the requirements of revitalizing the stock of financial resources, there may be market-oriented liquidation. 3) In terms of risk, in view of the three major areas of risk mentioned in the financial meeting, such as local debt, real estate, and small and medium-sized financial institutions, the fourth quarter of the cargo policy report added "strengthen the monitoring and analysis of the real estate market situation", and "promote the resolution of the risk of small and medium-sized financial institutions, and improve the early correction mechanism with hard constraints", and the real estate field may have more differentiated housing credit policies implemented by the cityThe risk mitigation and disposal work of small and medium-sized financial institutions may be accelerated.
The central bank's assessment of the domestic economy and inflation is more optimistic on the margin. Comparing the wording of the 2023Q3 and 2023Q4 monetary policy implementation reports, the research and judgment of the domestic economy are respectively "China's economic recovery continues to consolidate", "China's economy is expected to further rebound and improve", and the relevant statements in 2023Q4 are more optimistic at the margin. The judgment on inflation is also more optimistic, "prices are expected to rise modestly overall." The PPI decline is also expected to continue to converge. ”
Believe that overseas risks switch to political cycles. In terms of overseas monetary policy, the key statement is that "the current round of interest rate hike cycle in advanced economies may be over". The more optimistic about the end of austerity overseas can also be corroborated by the exchange rate-related statements. In terms of overseas political cycles,The PBOC's focus on the "big election year" also provides a key clue to the adjustment of domestic monetary policy.
It is proposed that "the economy should achieve effective qualitative improvement and reasonable quantitative growth". In the general tone of monetary policy, it still reiterates that "strengthening the counter-cyclical and cross-cyclical adjustment of macro policies" is added, but the key expression "continue to promote the economy to achieve qualitative and effective improvement and reasonable quantitative growth." ”
It is proposed to "reasonably grasp the relationship between the two largest financing markets, bonds and credit". Judging from the data of the past three years, the expansion rate of ** debt has been faster than the rate of credit expansion. In this regard, the People's Bank of China (PBoC) has guided financial institutions to "actively tap credit demand and project reserves", combined with the tone of "balanced delivery" of credit, so that the overall rate of credit expansion may remain high while volatility converges.
Accurately grasp the law of supply and demand of money and credit and the new characteristicsMore emphasis on "quality" rather than "quantity". First, the new characteristics of the law of credit require structural adjustment, inventory adjustment, and more balance. The report points out three key points in column 1: First, the economic structural transformation is accelerating, requiring high-quality credit delivery, that is, "increasing" in the "five major articles" and "decreasing" in real estate and local financing platforms. Second, more attention should be paid to revitalizing inefficient financial resources, including the write-off of non-performing loans and increasing the proportion of direct financing. The third is to reduce excessive attention to the monthly high-frequency data of money and credit, pointing to the credit rhythm or more balanced, and reducing unreasonable credit delivery such as "rush points". Second, it is expected that prices may rise moderately in 2024. The report points out that "the scale of social financing and the amount of money should be matched with the expected targets of economic growth and the level of economic growth" (previously matched with nominal GDP), pointing to the realization of price targets. Third, focus on key points, provide reasonable and appropriate support, mainly referring to the five major articles of science and technology, green, inclusive, pension, digital finance, private economy, affordable housing, "level-emergency dual-use" infrastructure and urban village transformation three major projects.
In terms of interest rate policy, the central bank's general attitude is still to guide interest rates downwardIt is more likely that the LPR will be lowered in the near futureHowever, the "risk pricing" requirement was emphasized. The central bank proposed in the column to "strengthen the supervision, management and assessment of LPR, improve the quality, and provide strong support for promoting the steady and moderate decline of social comprehensive financing costs", and in the previous press conference on January 24, Governor Pan Gongsheng clearly pointed out that the deposit rate cut and the RRR cut "will help promote the loan market interest rate of the credit pricing benchmark, which is what we call the LPR down", so the possibility of the LPR cut in the near future is not low.
However, at the same time, the central bank also put forward "risk pricing" for the first time in the monetary policy implementation report, requiring the relationship between loan and bond interest rates, and between large banks and small and medium-sized banks. While the central bank has been leading the way to reduce the cost of financing the real economy, it does not mean that financial institutions can completely ignore the risk to the point that some institutions may lend less than their bonds. Correcting this kind of low-interest lending behavior is conducive to the long-term development of China's interest rate liberalization.