Author丨Tang Jing.
Editor丨Zhou Yanyan.
On 8 February, the People's Bank of China (PBOC) released the Report on the Implementation of China's Monetary Policy for the Third Quarter of 2023 (the "Report"), which explains the policy orientation and key arrangements for the next stage on the basis of a systematic review of policies and achievements over the past year and a comprehensive analysis of the current economic and financial situation. On the whole, the central bank is still expected to maintain strong policy support for the economic recovery in the future. According to the reporter's combing and interview, the "report" mainly released the following eight heavy signals:
1.Maintain the scale of social financing and the amount of money in line with the expected targets of economic growth and the highest level
In the main idea of monetary policy in the next stage, the report follows the expression of the economic work conference "to keep the scale of social financing and the amount of money matching the expected target of economic growth and the level".
People close to the central bank told reporters that unlike the previous "keeping the growth rate of the amount of money and the scale of social financing basically matching the growth rate of the nominal economy", this statement clearly reflects the economic growth and the level of the economy, and also considers the expected factors, which is conducive to the overall planning of the economic and price goals, and the matching anchor is clearer, which can better guide and stabilize expectations. Specifically, the connotation of "matching" can be reasonably grasped from three perspectives
One is that "matching" does not mean "exactly equal".。The scale of social financing and the growth rate of M2 depend on the macroeconomic situation and the needs of regulation and control, and when the economic momentum weakens, it is appropriately higher than the nominal economic growth rate, and when the economy is overheated, the gap narrows or even lower, which is the need for countercyclical adjustment.
The second is that "matching" should be extended for a long time and across the cycle。Matching is a medium- to long-term concept, not every quarter or even every month. In the past two years, financial data has continued to lead the economic data, and the gap between economic and financial growth is expected to gradually close as the macroeconomic recovery improves.
Third, it is necessary to judge the strength of financial support more from the cumulative increment of loans。The increment of individual months is susceptible to multiple factors such as the base, seasonal rules, assessment and supervision, etc., and the cumulative increment can more objectively and comprehensively reflect the strength of support for a period of time.
2.Reasonably grasp the relationship between the two largest financing markets, bonds and credit
The report pointed out that in accordance with the requirements of vigorously developing direct financing, we should reasonably grasp the relationship between the two largest financing markets of bonds and credit. In terms of bonds, monetary policy should strengthen coordination and cooperation with fiscal policy to ensure the smooth issuance of ** bonds; In accordance with the requirements of vigorously developing direct financing, we will further optimize the financing structure and continue to promote the development of the corporate credit bond and financial bond markets. In terms of credit, we will support financial institutions to actively tap credit demand and project reserves around the nine key tasks deployed by the Economic Work Conference, and maintain reasonable growth in loans.
People close to the central bank said that it is necessary to look at the degree to which finance meets the financing needs of the real economy from a broader perspective. Financing support is not limited to credit, and direct financing channels such as bonds are actually more efficient than indirect financing, and both reflect the financial system's support for the real sector
Moreover, under the guidance of enhancing the consistency of macro policy orientation, the current financial, industrial and other macro policy effects will be reflected in the financing of ** bonds, corporate bonds, equity, etc., and the development of direct financing is also more suitable for scientific and technological innovation and new kinetic energy, which will produce a benign substitution for monetary and credit demand, and the combined investigation is also conducive to avoiding misinterpretation of monetary and financial conditions.
3.Accurately grasp the law of supply and demand of money and credit and the new characteristics, and improve the quality and efficiency of financial services for the real economy
* The Financial Work Conference clearly stated that it is necessary to "accurately grasp the laws and new characteristics of money and credit supply and demand", and the report interprets how to understand the new laws and new characteristics and how to deal with them in the future in the form of a special column.
According to the report, the transformation of China's economic structure is accelerating, requiring high-quality credit. On the one hand, new kinetic energy loans continued to grow rapidly, and their proportion increased steadily. Since 2018, the growth rate of inclusive small and micro loans, medium and long-term loans for manufacturing, and green loans has continued to be higher than the growth rate of all loans. At present, China's various relending tools have achieved basic coverage of the "five major articles", and will continue to guide financial institutions to increase support for major strategies, key areas and weak links, so as to meet the reasonable financing needs of high-quality economic development.
On the other hand, the growth of traditional kinetic energy loans such as real estate and local financing platforms has slowed down, and the proportion has gradually declined. In the past few years, real estate and local financing platforms have accounted for a large proportion of China's annual 20 trillion yuan of new loans. With the major transformation of China's real estate development model and the prevention and resolution of local debt risks, the demand for these two loans has declined significantly. Combining the above two aspects, although the overall growth rate may be lower than in the past, the quality and efficiency of financial services for the real economy are significantly improved
The report said: On the whole, it is necessary to accurately grasp the law and new characteristics of the supply and demand of money and credit, reasonably evaluate the strength of financial support, and solve the problem of "what to see." In the stage of high-quality development, economic development should not only be judged by economic growth, but also by financial support。It is necessary to look more at the effect of the decline in interest rates, and the steady decline in social financing costs shows that the credit demand of the real economy is reasonably satisfied; It is necessary to look more at the financial support in key areas such as scientific and technological innovation, green development, and small, medium and micro enterprises, so as to better reflect the degree to which financial resources meet the effective demand of the real economy; It is necessary to look more at the scale of social financing covering direct financing, or to observe the cumulative increment and balance growth rate for a longer period of time, so as to take a more comprehensive view of monetary and financial conditions.
4.The self-discipline mechanism of interest rates adheres to the direction of marketization and helps the comprehensive financing cost of the society to decline steadily
The interest rate self-discipline mechanism adheres to the market-oriented direction and is an important institutional guarantee for the market-oriented reform of interest rates. The report details the successful practice of the interest rate self-discipline mechanism over the past decade.
On the one hand, it fully embodies the characteristics of marketization, led by commercial banks with strong pricing power, and continuously improves the pricing power of the banking system as a whole through industry self-discipline and coordination, so as to promote the formation of a reasonable interest rate level in a market-oriented environment. In December 2023, the weighted average interest rate of new corporate loans and personal housing loans was 3., respectively75% and 397%, which is about 1 percent lower than before the LPR reform in 20196 percentage points is the lowest level since the statistics began, and it has effectively played a role in promoting consumption, stabilizing investment, and expanding domestic demand.
On the other hand, the micro foundation of the transmission of monetary policy has been smoothed, and the national and provincial levels have coordinated and linked, transmitted layer by layer, and formed a joint force to carry out self-discipline management on the pricing of deposit and loan interest rates of more than 400 trillion yuan, so as to help the central bank promote the market-oriented reform of interest rates in an orderly manner. At present, members of the interest rate self-discipline mechanism account for about half of the total number of commercial banks.
According to the report, in the next step, the People's Bank of China will guide the interest rate self-discipline mechanism to improve the interest rate self-discipline management mode, improve the formation, regulation and transmission mechanism of market-oriented interest rates, and promote finance to better serve the real economy to make new contributions.
One isStrengthen the supervision, management and assessment of LPR, improve the quality, and provide strong support for promoting the steady and moderate reduction of comprehensive social financing costs. Guide member units to reasonably adjust the deposit interest rate level according to changes in market interest rates.
The second isBanks should be urged to continue to improve the interest rate pricing mechanism for deposits and loans, adhere to the principle of risk pricing, and earnestly straighten out the interest rate relationship between the credit market and the bond market, and between large banks and small and medium-sized banks.
The third isEstablish and improve self-discipline interviews and notification mechanisms, enhance the seriousness and authority of interest rate self-discipline, improve the organizational structure of interest rate self-discipline mechanisms, and promote efficient performance of duties.
5.Focus on the "five major articles" and give full play to the guiding role of monetary and credit policies
In recent years, the People's Bank of China (PBOC) has continuously enriched its monetary policy toolbox and made a good move in doing a good job in the "five major articles" and optimizing the credit structure. According to the report, by the end of 2023, inclusive small and micro loan support tools will cumulatively support the increase of inclusive small and micro loans33 trillion yuan, carbon emission reduction support tools have driven carbon emission reduction of more than 200 million tons, inclusive pension special re-lending has supported more than 60 projects in 5 pilot provinces, and more than 400 billion yuan of special re-loans for scientific and technological innovation and equipment renovation have also continued to play a role. Driven by various tools, since 2018, the growth rate of inclusive small and micro loans, medium and long-term loans for manufacturing, and green loans has continued to be higher than the growth rate of all loans.
It is worth noting that in the part of "improving the structural guidance efficiency of credit policies", the report has added "overall credit support for green development and energy transition" and "strengthening financial support for the pension sector".Corresponds to the "five big articles".。The "Industry Analysis" of this report also selects the technology-intensive machinery industry and the pension industry that embodies humanistic care.
People close to the central bank said that these adjustments fully reflect that the monetary policy will further implement the spirit of the first economic work conference and the first financial work conference, adhere to the fundamental purpose of financial services for the real economy, optimize the capital supply structure, and create a suitable monetary and financial environment for high-quality development
As for the next stage of monetary policy thinking, the report proposes to "implement all kinds of existing special re-lending tools, integrate tools and programs to support scientific and technological innovation and digital finance", focus on key points, improve policy efficiency, and guide financial resources to focus on key areas and weak links.
At the same time, the report also proposes to improve the efficiency of the use of existing loans by reinvesting some loans after maturity, optimizing the investment direction of new loans, and promoting market-oriented liquidation, so as to better promote the optimization of credit structure by combining increment and stock.
6.It is necessary to improve the legal system of the bond market and consolidate the legal foundation of corporate credit bonds
In the part of "the main ideas of monetary policy in the next stage", the report also emphasizes the need to continuously deepen financial reform and opening up, which focuses on improving the legal system of the bond market and consolidating the legal foundation of corporate credit bonds. Establish a linkage mechanism between market makers and primary dealers in the open market, improve the management of bond underwriting, valuation, market making and other businesses, and improve the pricing function and market soundness of the bond market. Promote the expansion of over-the-counter bond business, and improve the convenience and efficiency of individuals, enterprises, and small and medium-sized financial institutions to invest in ** bonds through over-the-counter channels.
At the same time, we will strengthen the macro-prudential management of the money market and improve the liquidity monitoring mechanism of the money market. Adhere to the principles of marketization and rule of law, continue to implement the concept of "zero tolerance", and intensify the investigation and punishment of violations of laws and regulations in the bond market. We will unswervingly promote the opening up of the bond market.
In addition, we will promote the internationalization of the renminbi in an orderly manner, further expand the use of renminbi in cross-border** and investment, deepen foreign currency cooperation, and develop the offshore renminbi market. We will carry out pilot projects for high-level opening-up of cross-border investment, improve the level of liberalization and facilitation of cross-border investment, and steadily promote the convertibility of RMB under the capital account.
7.Accelerate the establishment and improvement of total loss absorption capacity of China's global systemically important banks
In the part of "Main Ideas of Monetary Policy in the Next Stage", the report also emphasizes the need to actively and prudently prevent and resolve financial risks, and mentions the need to improve the supervision of systemically important financial institutions, promote systemically important banks to meet additional regulatory requirements on time, and accelerate the establishment and improvement of China's global systemically important banks to establish and improve their total loss absorption capacity and effectively improve their risk resilience. At the same time, we will further improve the macro-prudential policy framework, improve the ability to monitor, assess and warn systemic risks, and enrich the macro-prudential policy toolbox.
The report also calls for actively promoting risk management and risk reform in key regions, key institutions and key areas. Guide financial institutions to follow the principles of marketization and rule of law, and rationally use debt restructuring, replacement, and other means to support the resolution of debt risks of local financing platforms. Strengthen the monitoring and analysis of the real estate market. Promote the resolution of risks of small and medium-sized financial institutions, and improve the early correction mechanism with hard constraints. Promote the introduction of a financial stability law as soon as possible. We will improve the risk disposal responsibility mechanism that is consistent with rights and responsibilities and compatible with incentives and constraints, give full play to the professional risk disposal function of deposit insurance, strengthen the construction of a financial stability guarantee system, prevent the accumulation and spread of financial risks, and firmly guard the bottom line of no systemic risks.
8.There is no basis for long-term deflation or inflation in our country
In the "China's Macroeconomic and Financial Outlook" section, the report said that looking forward to 2024, China's economy is expected to further rebound and improve, and prices are expected to recover moderately. Since the fourth quarter of 2023, the CPI has continued to run in the negative range year-on-year, in addition to the impact of the high base of pork and other foods, the growth rate of durable goods and services** is also weak, and the core CPI has increased from 08% to 06%。Inflation fundamentally depends on the balance between supply and demand in the real economy, and the current low price level reflects the lack of effective demand in the economy and the asynchronous recovery of aggregate supply and demand. In the future, as the base effect gradually weakens and the demand for goods and services continues to recover, prices are expected to rise moderately. The PPI decline is also expected to continue to converge.
According to the report, in the medium and long term, China is in a critical period of economic recovery and industrial transformation and upgrading, supply and demand conditions are expected to continue to improve, monetary conditions are reasonable and moderate, residents' expectations are stable, and there is no basis for long-term deflation or inflation.
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Editor: Li Yutong, Intern: Zhao Fengling.
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