On january 24, china's news bureau held a press conference, the president of the people's bank of china, ban kung-sung, the vice-president of the people's bank of china, and the director of the national foreign exchange administration, zhu tsuk-sin, and the vice-president of the people's bank of china, shin chang, responded to the journalists' questions about china's price levels, lower savings reserve rates, fluctuations in credit data and the renminbi exchange rate。
Establishment of the credit markets division
Pan kung-sung described the priorities for 2024. The first is to maintain sound monetary policy and implement flexible, moderate and precise requirements that continue to create a sound monetary and financial environment for stable growth in the real economy。
Second, financial support for key strategies, areas of focus and vulnerabilities should be increased, with a “five articles” on finance. The combined volume and structure of monetary policy instruments will continue to serve as a tool for innovation and will continue to guide financial institutions in the “five articles” of science and technology finance, green finance, inclusive finance, old-age finance and digital finance. With central approval, the people's bank will establish a credit market department, which will focus on five major articles。
Third, there is a sound and effective protection against financial risks in priority areas. The prevention and control of financial risks is a permanent theme of financial work. The next step will be to address risks in priority areas and priority institutions in a sound and effective manner, in line with the principles of market and rule of law. To improve the financial safety net and to continue to promote financial stability legislation。
Fourth is the continued deepening of financial reform and openness. On the one hand, financial reform is being advanced in depth. On the other hand, there is a strong commitment to the high level of financial openness. Deepening the institutional opening of the financial sector and expanding financial market connectivity both within and outside the country. It is a good idea to move the renminbi towards internationalization. Continue to support hong kong and shanghai in upgrading international financial centres。
Fifth is active participation in international financial governance and deepening international financial cooperation. To practice multilateralism and strengthen dialogue and communication, relying on such platforms as the group of twenty, the international monetary fund and the bank for international settlements to advance global macroeconomic and financial policy coordination. Follow-up to the consensus meeting between the heads of state of china and the united states of america in san francisco, leading the work of the central and central european financial task force。
Downsizing of 0. 5 percentage points of deposit reserve
At that meeting, pan kung-sung announced that on 5 february, the deposit reserve rate would be reduced by 0. 5 percentage points to provide the market with long-term liquidity of $1 trillion. Tomorrow (25 january) we will begin a downward transfer of small agricultural re-credit and discount interest rates of 0. 25 percentage points, while we will continue to drive a steady reduction in the cost of integrated social finance。
The stability of cross-border financial flows will be further enhanced
With regard to the situation of cross-border financial flows in china, zhu zhou zhou xianxiang has indicated that, according to figures from the foreign exchange office, the country's cross-border financial flows have remained more stable in the recent past, as evidenced by the continued high level of net current account inflows. The current account surplus for the whole of 2023 would be around $280 billion, of which the trade surplus for goods would exceed $600 billion, which was also historically second-high. In addition, recent foreign investment in china has shown positive trends. The net increase in domestic bonds since last september for four consecutive months has accumulated over $64 billion. This year's stability of our cross-border financial flows will be further enhanced, our current account will remain in a reasonable surplus and foreign capital inflows will be more dynamic。
Moreover, with regard to foreign exchange facilitation, zhu xianxiang points out that the overall direction is to deepen reforms and advance the facilitation process through a combination of high-quality development and a high level of security, as well as to serve the real economy in order to bring about a more stable recovery of our economies over the long term。
Cpi will warm up
What does central banks think about prices this year? What policy initiatives are used to address possible deflation risks
In response, ban kung-sung stated that, for china, normal monetary policy had been maintained during the epidemic, with no significant gains or releases. The industrial chain and supply capacity are sound and still operate smoothly. Against the background of high global inflation, our prices were generally stable, free from inflation and deflation. China increased its cpi by 0. 9 per cent in 2021 and 2 per cent in 2022. Cpi increased by 0. 2 per cent in 2023, a marked decrease from the previous year. International financial organizations, such as the imf, and financial institutions in multiple markets also forecast that, as domestic demand continues to improve and the external price situation changes, china's price levels will rise mildly in 2024。
Pan kung-sung says three things:
The first is to maintain price stability and promote a moderate recovery of prices as an important consideration in managing monetary policy. Economic growth should be promoted by adhering to monetary policy objectives and maintaining stability in the currency。
The second is to optimize financial resource investment. Inducing financial institutions to assess risks in a scientific manner and to limit the availability of financing to overcapacity-producing industries, while meeting reasonable consumer financing needs more specifically。
Thirdly, there is greater coherence between financial and other policies. It is a broader issue that goes beyond the financial sphere and involves policy synergies to increase income, expand employment, improve social security systems, deepen consumption-driven strategies, invest in the expansion of domestic demand, promote the matching of supply and demand and promote a virtuous economic cycle。
Don't overread the volatility of single-month credit data
Question was asked: how are individual quarterly or monthly data considered to be more volatile
According to chen chang, according to the calendar year, the increase in the number of new loans during the quarter, particularly in january, is due to the fact that april, july and october are small months of loans, a seasonal pattern that is largely characterized by objective factors of economic and financial performance. For example, the private sector often says that “one year depends on the spring” and the various operators generally seek to “open the door” and that large projects generally start at the beginning of the year, as well as spring tillage at the beginning of the year and the payment of wages before the spring season, all of which give rise to more intensive financing needs. Following the trans-shipment of the epidemic, three years of intensive credit demand was released, adding to the high level of lending during the first quarter of the year. In general, a good economic recovery requires stable and sustained credit support, with the key to grasping “degrees”, while respecting objective patterns and avoiding unusual credit behaviour that clearly deviates from historical levels。
“the volatility of single-month credit data should not be interpreted too much, and a more multifaceted view should be taken, ranging from a broader range of social finance to a price-to-interest perspective, observing changes in financing costs and a reasonable assessment of financial support to the economy. The blogger says:。
The rmb exchange rate will remain essentially stable
In 2023, the renminbi depreciated against the united states dollar, and how does the central bank look at the performance of the renminbi this year? What factors may influence exchange rates
The success of pan indicates that the short-term effects of exchange rates are multifaceted, such as economic growth, monetary policy, financial markets, geopolitics, risk events and so on, and that medium- and long-term trends depend fundamentally on economic fundamentals. It is therefore judged that the exchange rate of the renminbi in 2024 will continue to be generally stable at a reasonable level of equilibrium. The factors that support the rmb exchange rate are mainly several:
One is the sound functioning of the domestic economy. Our economy has a sound and solid fundamentals and maintains a long-term general trend towards good, which is an important basis for the fundamental stability of the rmb exchange rate。
Secondly, there have been some changes in the external international financial environment. The shift in the market towards the federal reserve's monetary policy and the weakening of the united states dollar's dynamism should be the more general consensus in the market. The misalignment in the monetary policy cycle of the united states and china is expected to improve, which will contribute to the contraction of the chinese-american spreads and contribute to a more stable and balanced exchange rate and cross-border financial flows。
Thirdly, the rmb assets have better investment and risk avoidance values. The opening of china's financial markets to the outside world has continued, and renminbi bonds, as a financial market with a small global price stability, are more attractive to foreign investors. Since september last year, china’s renminbi bond market has been net-inflowing for four consecutive months, increasing the size of domestic bonds held by foreign investors by nearly 500 billion yuan。
Fourth is a stronger micro-base of exchange rate stability. The balance of payments is essentially balanced, with the current account balance and GDP ratio remaining within reasonable ranges, at 1. 6 per cent in the first three quarters of 2023. Cross-border trade and access to finance have continued to improve and cross-border flows have been balanced. The foreign exchange market has become more resilient and the players have matured. Moreover, the use of exchange-rate avoidance tools has become more widespread, the use of the renminbi has increased rapidly and operators have been better able to cope with external shocks and exchange rate movements。
It is worth mentioning that pan kung yung has also shared views on capital markets。
He indicated that the central party, the state council, was very concerned about the stability and development of capital markets. On 22 january, the general assembly of the state council conducted a thematic study and deployment. At present, the country's macroeconomic recovery is good, there is considerable scope and scope for macroeconomic policy and a solid foundation for stable and healthy capital market development. The people's bank will carefully follow up on the general meeting spirit of the state council, intensify counter-cyclical and cross-cyclical monetary policy, work hard to stabilize markets, build confidence, consolidate and enhance economic recovery and create a sound monetary and financial environment for the functioning of financial markets, including capital markets。
Firmly uphold hong kong's status as an international financial centre
In order to promote a high level of openness to hong kong in the financial sector in the mainland, the people's bank has been promoting major projects over the past several years, largely annually and by the relevant institutions in hong kong. The expansion of a high level of openness to the outside world is a fundamental national policy. Hong kong is one of the major international financial centres, the largest offshore market in the world and the most important asset management centre in asia, the private wealth management centre. The people's bank has been supporting the construction of the hong kong offshore renminbi hub, promoting a high level of openness to hong kong's financial services in the mainland, upholding hong kong's status as an international financial centre and maintaining long-term prosperity and stability in hong kong。
Federal reserve monetary policy shift
At that meeting, with regard to the federal reserve’s monetary policy, pan kung-won indicated that since march 2022, when the federal reserve started raising interest rates, the us policy rate has now increased by 525 basis points, reaching 5. 25-5. 5 per cent, and the ecb has increased interest rates ten times, raising the main refinancing rate from 0 per cent to 4. 5 per cent. At the same time, the effects of rapid interest rates on economic growth, inflation and financial markets in developed economies are gradually emerging. There is also much discussion in the market, and there is a general expectation that both the fed and the ecb will be able to reduce interest rates in 2024. Overall, in 2024, the monetary policy orientation of the federal reserve has seen a shift。
“the expected correlation between dollar index changes and policy interest rates is strong, so that with the fed's ending interest rate hikes, there is also a general expectation in the market that the dollar index will be further and significantly less dynamic.” pan kung-sung noted that the spillover of monetary policy in developed economies in 2024 would be in the direction of decreasing pressure, and that such an external environment would contribute objectively to enhancing china's autonomy in the operation of monetary policy and to expanding the space for it to operate. (new latitude app)
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