China’s economy has ushered in an important milestone-in 2020, my country’s gross domestic product (GDP) will exceed 100 trillion yuan for the first time. What is quite rare is that behind the 100 trillion yuan, there is neither a quantitative easing policy nor zero or even negative interest rates.

As one of the few major economies that implement normal monetary policies, China’s monetary policy”stable” has given the world a glimpse of the macro-control capabilities and levels of the”world engine”.

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A staff member of the business department of the Beijing branch of the Bank of Communications is counting banknotes. Photo by Xinhua News Agency reporter Li Xin

Neither”big-handed” nor”daunted”

Currently, the global economic recovery is relatively slow, and the United States plans to Introduce a new round of stimulus package. In this context, every move of China’s monetary policy has caught the attention of the world.

“Adhere to the word ‘stable’ and do not make a sharp turn.” Chen Yulu, deputy governor of the People’s Bank of China, reiterated the tone of my country’s monetary policy a few days ago.

How does the word”stable” manifest itself? First of all, it is necessary to ensure that the total amount of money is moderate and that the liquidity is reasonable and abundant. Neither let the market be short of money, nor allow the market’s money to overflow.

In recent years, some major developed economies have continuously adopted interest rate cuts and quantitative easing policies. The launch of the”money printing machine” has brought high debt and weak growth…

China is a minority One of the major economies implementing normal monetary policies, keeping broad money (M2) and the growth rate of social financing at the same rate as the nominal economic growth rate match.

Data released by the Central Bank shows that as of the end of December 2020, my country’s M2 balance was 218.68 trillion yuan, a year-on-year An increase of 10.1%; the stock of social financing was 284.83 trillion yuan, an increase of 13.3%year-on-year.

Monetary policy can neither be”expensive” nor”fearful.” When encountering the impact of the epidemic, the economic growth rate may deviate greatly from the potential output level. It is necessary to grasp the intensity, rhythm and focus of currency injection.

In 2020, in response to the impact of the epidemic, the central bank lowered the deposit reserve ratio three times to release 1.75 trillion yuan in liquidity, introduced more than 9 trillion yuan of monetary policy support measures, and promoted the financial system to transfer profits to the real economy by 1.5 Trillions of yuan, tiered and gradual introduction of re-loan and re-discount policies…

With the support of the monetary policy headed by the word”stable”, China took the lead in controlling the epidemic, resuming work and production, and taking the lead in realizing the economy Positive growth and better fundamentals than other major economies. As the economy stabilizes and improves, China’s GDP has successfully reached the 100 trillion yuan mark.

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In 2020, my country’s new loans hit a record high, and credit growth basically achieved the annual target. Charting:Wu Yu

Increase precise support to stabilize corporate cash flow

A prudent monetary policy needs to be flexible and precise. How can”precision” be reflected?

In 2020, my country’s new loans hit a record high-19.63 trillion yuan. Where did the money go? Among the new loans throughout the year, enterprises (institutions) accounted for more than 60%of the new loans. Among them, loans to manufacturing enterprises and small, medium and micro enterprises have increased significantly.

Data shows that by the end of 2020, the balance of medium and long-term loans in my country’s manufacturing industry increased by 35.2%year-on-year, the growth rate was 20.3 percentage points higher than the previous year, and has been rising for 14 consecutive months; the balance of inclusive small and micro loans increased by 30.3%, 7.2 percentage points higher than the previous year; the growth rate of real estate loan balance has fallen for 29 consecutive months.

The real economy of precise drip irrigation can also be confirmed by the data changes of M1.

“With the support of the structural policy of stabilizing enterprises and ensuring employment, the manufacturing industry, wholesale and retail industry have received a lot of Financial support has stabilized corporate cash flow and promoted a rapid increase in corporate demand deposits.” According to Ruan Jianhong, Director of the Investigation and Statistics Department of the Central Bank, demand deposits in my country’s manufacturing and wholesale and retail industries increased by 16.5%year-on-year at the end of November 2020.

Monetary policy should not make a sharp turn, and the sustainability of the normal monetary policy space must be maintained. Therefore, the Central Bank made it clear that in 2021, it will continue to play the role of structural monetary policy tools precision drip irrigation, technological innovation, small and micro enterprises, and green development. Financial support in key areas will continue to increase, and two monetary policy tools that directly reach the real economy will also be implemented.

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On March 26, 2020, a mushroom industry development company in Yunyang District in Shiyan City, Hubei Province , Workers sort the mushrooms on the mushroom processing line. The financial institutions of Yunyang District issued agricultural loans to this shiitake mushroom company to support the company’s purchase of unsalable shiitake mushrooms from local farmers. Published by Xinhua News Agency (photo by Cao Zhonghong)

Handle the relationship between economic recovery and risk prevention

Currently, there are many uncertainties in the epidemic situation and the external environment The international economic and financial situation remains complex and severe. While monetary policy strongly supports the real economy, it is necessary to handle the relationship between economic recovery and risk prevention.

In 2020, the impact of the epidemic will lower the GDP growth rate, and will also make my country’s macro leverage ratio rise in stages. However, since the third quarter of last year, the growth rate of macro leverage has slowed down. In December last year, the growth rate of M2 and social financing fell slightly from the previous month, and the increase in new household sector loans was also significantly lower than the previous month.

Experts believe that this year’s monetary policy will be a dynamic balance between stabilizing the macro-leverage ratio, resolving debt risks, and avoiding rapid overall credit contraction. It is expected that the growth rate of the macro-leverage ratio this year can return to a basically stable track.

“At present, the global economic recovery is relatively slow, and the pressure transmission to the real economy is superimposed on the inherent fragility of the financial system. External risks need to be vigilant.” Chen Yulu believes that in response to external risks, we must insist on “domestic”Priority” principle, continue to do your own thing.

In 2020, my country will achieve important phased results in the battle to prevent and resolve financial risks. Chen Yulu believes that in 2021, the word”stability” must be the top priority, focus on work, and keep the bottom line of risk. Improve the financial supervision system, perfect macro-prudential management, and continuously improve the ability to prevent and control systemic risks.

Text reporter:Wu Yu