How to Make a Good Job of "Striving for Progress in Stability" in Finance

2018-09-04 15:58

Persisting in seeking progress while maintaining stability is a valuable experience for the financial industry to help China achieve decisive achievements in building a moderately prosperous society in all respects, continuously improving the quality and efficiency of serving the real economy, and also the overall tone for the financial system to continue to adhere to in the next step.


At the 2021 financial statistics press conference held by the State Council Office on January 18th, Liu Guoqiang, Vice President of the People's Bank of China, reiterated the above concept in his speech. Looking back at the work of the People's Bank of China over the past year, whether it was the various policies of the People's Bank of China actively guiding the growth of currency and credit back to normal in the first half of 2021 when there were many positive factors in the domestic economic operation, or the various measures taken by the People's Bank of China to coordinate cross year policy connections and leverage the dual functions of the total amount and structure of monetary policy tools under pressure in the domestic economic development in the second half of the year, The overall idea of 'stabilizing the character and seeking progress while maintaining stability' has always been implemented.


It is precisely with the support of flexible, precise, and reasonable monetary policies that China's main financial indicators continue to maintain strong growth in 2021 on the basis of the high base in 2020. The financial system operates smoothly, and the financial support for the real economy is stable. The annual corporate loan interest rate in 2021 was 4.61%, a decrease of 0.1 percentage points compared to 2020 and 0.69 percentage points compared to 2019, which is the lowest level in more than 40 years of reform and opening up. The balance of mid-term loans in the manufacturing industry and the balance of inclusive small and micro loans have achieved significant year-on-year growth.


However, despite the emphasis over the past few years on 'stability as the top priority and seeking progress while maintaining stability', it is by no means static. Under this overall tone, there are also new and changing monetary policies tailored to the characteristics of economic and financial work each year. Regarding the relevant work in 2022, the People's Bank of China has made it clear that it should make sufficient efforts, precise efforts, and advance efforts.


Adequate power is to maintain stable growth in the total amount, and to ensure that the growth rate of the money supply and social financing scale basically match the economic growth rate. Currently, the economy is facing triple pressures of demand contraction, supply shock, and weakening expectations. Before the downward pressure on the economy is fundamentally alleviated, more policies that are conducive to stability need to be introduced. Therefore, the People's Bank of China has repeatedly emphasized in recent meetings that it is necessary to comprehensively use various monetary policy tools, maintain reasonable and sufficient liquidity, enhance the stability of credit aggregate growth, and increase support for the real economy. This meeting is particularly clear in proposing to expand the monetary policy toolbox, maintain aggregate stability, and avoid credit collapse. Of course, in order for the above policies to better benefit the real economy, in addition to the policies issued by the People's Bank of China, it also depends on the implementation situation. Therefore, the "stable" policy is accompanied by deepening reforms, better leveraging the effectiveness of the loan market quotation rate (LPR) reform, and improving the formation and transmission mechanism of market-oriented interest rates will still be important aspects to promote the stable and steady reduction of comprehensive financing costs for enterprises, and the continued transfer of benefits from the financial system to the real economy.


The key to precise power lies in the steady optimization of the structure. To do a good job in financial work, we should not spread "pepper noodles" widely, but make precise efforts to better support areas and weak links in accordance with the requirements of the new development concept. Currently, the macro leverage ratio continues to decline, creating space for the future financial system to increase support for small and micro enterprises, technological innovation, and green development. In fact, the People's Bank of China has recently implemented multiple measures to promote the implementation of structural policies. According to the deployment of the Economic Work Conference, the People's Bank of China has further increased its efforts in cross cycle adjustment, made good policy connections between different years, actively used structural monetary policy tools to do a good job of "addition", implemented the continuous conversion of two direct tools, and issued the first batch of carbon emission reduction support tool funds. These measures not only help to stabilize the total credit volume and optimize the credit structure, but also contribute to the smooth start of 2022 across cycles. They will continue to guide financial institutions in a market-oriented manner to provide effective support and better optimize the economic structure.


Putting forward means that policies need to be forward-looking. According to the 2021 economic data released by the National Bureau of Statistics, China's gross domestic product (GDP) has exceeded the one trillion yuan mark for the second consecutive year, an increase of 8.1% year-on-year and an average growth of 5.1% over the past two years. It stands out among major economies in the world. However, it is also necessary to face the multiple pressures facing China's economic development. At the end of last year, the economic growth rate slightly decreased, the consumption index decreased, and various difficulties and challenges increased significantly. Therefore, monetary policy should stay ahead of the market curve and respond promptly to the general concerns of the market. In order to increase liquidity supply, hedge against short-term factors such as the peak tax period in January, accelerated issuance of government bonds, and cash injection before the Spring Festival, and maintain reasonable and abundant liquidity, the People's Bank of China launched a convenient one-year lending operation of 700 billion yuan and a 7-day open market reverse repurchase operation of 100 billion yuan on January 17th. At the same time, it also promoted a 10 basis point decrease in both the convenient medium-term lending and open market reverse repurchase bid rates, This is a manifestation of forward-looking policy regulation.


The more challenging the moment is, the more confident and resolute it is to be. In the past year, China's economic development and epidemic prevention and control have maintained a global position, which is our confidence and confidence. It is also an important foundation for us to strive to promote high-quality development of the Chinese economy in the future. Currently, the financial management department has released clear policy signals. The financial system should organically combine stable growth, structural adjustment, and reform to provide stronger, more precise, and more support for the real economy. Efforts should be made to stimulate the vitality of various market entities and take high-quality development to a new level.


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