Monetary policy is only one aspect of a country's important policy, and loose monetary policy alone is not enough to obtain economic growth and an active capital market. Therefore, we want to have a more accurate expectation of China's economy, finance or ** in 2024, and we also have to take a closer look at where the money is going.
A variety of information shows that Chinese investment is currently facing an obstacle - investment demand is not strong, and it is not so sensitive to capital**. One consequence of this is that there may not be a shortage of liquidity in the market, but the money may be idling and not going to the real economy.
This can also be seen from a set of statistics from the central bank: as of the end of 2023, the balance of China's broad money**, or M2, is as high as 29227 trillion yuan, an average annual increase of 24 trillion yuan in the past four years, and the growth rate is several times that of China's economy.
The so-called M2 is an important caliber of the central bank's monetary statistics, which refers to the total amount of money in circulation in society, plus demand and time deposits in financial institutions. It stands to reason that with an increase of more than 20 trillion m2 per year, a large amount of money should have flowed to the real economy and pushed up the price level. Or it can flow into the property market, **push up assets**, and let house prices or stock prices grow. However, in recent years, China's price level, stock price, real estate market, etc., have not had such obvious feedback.
At the same time, residents' deposits are increasing rapidly. From 2020 to 2023, China added 11 new RMB deposits3 trillion yuan, 99 trillion yuan, 1442 trillion yuan and 1667 trillion yuan. This is also a sign of the idling of funds.
So what to do? In order to solve this problem, the central bank has continuously lowered deposit rates since 2022, trying to drive funds out to increase investment and consumption. So far, the growth rate of deposits in banks has been much higher than the growth rate of loans. If the problem of market confidence and expectations cannot be effectively solved, even if the central bank cuts interest rates further, a large amount of funds may still be turned into deposits, rather than into real economic investment, which is the uncertainty of China's industrial investment and ** investment in 2024 that Caijing currently sees.
However, I would like to remind you that in 2023, China's automobile, e-commerce and other fields have made huge breakthroughs in going overseas. Therefore, when analyzing the monetary policy of the People's Bank of China in 2024, it is also necessary to consider its impact on the RMB exchange rate and exports.
Looking ahead to 2024, if the Fed keeps the current policy rate unchanged in the first half of the year, and the People's Bank of China cuts interest rates more sharply in the first half of the year, it may lead to further outflows of some short-term capital from Chinese mainland and increase the pressure on the RMB to depreciate.
However, for China's exports, appropriate tolerance of the depreciation of the renminbi or the increase in the fluctuation of the exchange rate may generally be conducive to the export growth of Chinese enterprises. According to estimates, the exchange rate of the RMB against the US dollar in 2024 may be 69 yuan-76 yuan, which is a very important reference value for many export enterprises and residents' asset allocation.
In order to keep the RMB exchange rate at a reasonable and balanced level, there are appropriate fluctuations, the PBOC is more likely to consider the pace and magnitude of the Fed's interest rate cuts, and if the Fed does not cut interest rates as early as the market thinks, and is not as aggressive as the market thinks, then the pace of the PBOC's monetary easing will also slow down.
Therefore, I would like to remind you that in the face of China's monetary policy, which may continue to be relaxed, as well as the resulting sufficient market liquidity, as well as the lack of confidence in financial and industrial investment, you can consider it when investing. How to choose our own investment and how to do a good job in proper asset allocation really need us to think twice.
However, the good news is that ** Huijin Company on February 6 sharply increased its position, the China Securities Regulatory Commission also publicly encouraged investment institutions to invest in a low layout, and the A** field also ushered in a long-lost large **, which is a manifestation of the recovery of confidence in the investment market, of which the relatively loose monetary policy is pointed, which obviously also plays a role in basic guarantee.