Economic reporter for the 21st century
In 2021, central banks increased their support to the real economy through a combination of calibration, downward lpr and downward refinancing rates, and the cost of integrated enterprise financing continued to decline。
On 18 january, the vice-president of the central bank, liu guoqiang, reported at the new press conference on financial statistics in 2021 that the interest rate on corporate loans was 4. 61 per cent for the whole of 2021, a decrease of 0. 1 percentage points from 2020 and 0. 69 percentage points from 2019, the lowest level in more than four decades of reform liberalization。
“stable monetary policy in 2022 is flexible and moderate, with greater cross-cyclical regulation, a more proactive, proactive and forward-looking function of both volume and structure of monetary policy instruments.” according to liu, one of the priorities is to maintain a steady reduction in the cost of integrated enterprise financing, to develop and channel sound market interest rates, to leverage the efficiency of the reform of the pricing rate in the lending market, to stabilize the cost of bank liabilities, to promote a steady reduction in the cost of integrated enterprise financing and to promote the financial system to yield benefits to the real economy。
Liu qiang stressed that the economy is currently under triple pressure, that policies that are not conducive to stability have not been put in place until the downward pressure has been substantially reduced, and that policies that are conducive to stability have been put in place with a focus on stability, and that the requirements of the policy are to be effective in three ways: to be effective, to be effective and to be proactive。
The interest rate on corporate loans has been at its lowest level in over 40 years
According to data released by the central bank today, the cumulative increase in the scale of social financing in 2021 was $31. 35 trillion, 3. 44 trillion less than in 2020 and 5. 68 trillion more than in 2019. Of this amount, rmb loans to the real economy increased by rmb 19,94 trillion, or rmb 90. 7 billion less than the same amount。
“in 2021, financial support to the real economy remained strong, with the scale of social finance increasing at a rate broadly commensurate with the nominal rate of economic growth, and the lending of financial institutions to the real economy remaining stable.” at the launch, the director of the central bank's investigation and statistics department, nguyen jianhong, responded to a question from economic reporters for the twenty-first century。
In terms of lending flows, there was a faster increase in lending in 2021 in areas such as manufacturing and inclusive. By the end of 2021, the balance of medium- and long-term loans in manufacturing had increased by 31. 8 per cent each year, an increase of 20. 2 percentage points over loans; the balance of inclusive micro-credit had increased by 27. 3 per cent over the same period; the number of inclusive micro-crediters had exceeded 44 million; and long-term loans in industry had increased by 22. 6 per cent。
Although the interest rate on enterprise loans was 4. 61 per cent throughout 2021 and reached its lowest level in more than 40 years of reform and opening up, the trend was not always downward throughout the year. Central bank data show that the average weighted interest rates for corporate loans in march, june, and september were 4. 63 per cent, 4. 58 per cent and 4. 59 per cent, respectively, and that the average weighted interest rate for corporate loans in december could be measured at no less than 4. 59 per cent。
Which areas will be primarily supported by loans in 2022? According to liu qiang, this year financial institutions will be directed to increase their support for the real economy, particularly micro-enterprises, science, technology and innovation, and green development, to stabilize macroeconomics and create an appropriate monetary and financial environment for high-quality economic development。
The report of the center for financial studies of transport banks predicts that the m2 growth rate in 2022 was around 8. 7 per cent, a slight increase over 2021; that the new size of the society was around $3. 4 trillion, with stock growth at about 10. 8 per cent and a trend towards lower levels; and that the new rmb loan size was around $21 trillion, a slight increase over the previous year, with the balance increasing by about 11 per cent over the previous year; and that the tightness of real estate credit would improve, and that inclusive and green loans would be important players in credit support of the real economy。
In addition to the three above-mentioned priority areas, economic journalists for the twenty-first century have previously been informed that infrastructure, rural revitalization, manufacturing, etc. Will also be the focus of lending by banks。
Continue to promote stable cost reductions in integrated enterprise finance
As noted above, since june 2021, the weighted average interest-rate hub for enterprise loans has been on the upward trend, and in order to further contribute to the downward trend in the cost of integrated enterprise financing, central banks have been working continuously since the second half of the year: a full reduction of 0. 5 percentage points in july and the release of 1 trillion yuan in long-term liquidity; an additional 300 billion yuan in small refinancing lines in september; and another full reduction of 0. 5 percentage points in december, with a downward adjustment of 0. 25 percentage points in the interest rate on small refinancing for farmers and 0. 05 percentage points in the 1-year lpr。
On 17 january, the central bank carried out the mlf repurchase operation, with a high expectation that both rates would be reduced by 0. 1 percentage points, and the market forecast that the new round of lpr offers on 20 january would be synchronized。
“since this year, the people's bank has stepped up cross-cyclical reconciliations, increased liquidity investment, pushed down 10 basis points in the 1st january mlf and 7th-day open-market operating rates, followed by a corresponding downward trend in the currency and bond markets, combined with the lpr quotes taking into account factors such as the cost of its own funds, risk premiums and market supply and demand, and the lpr will fully reflect market interest rate changes in a timely manner, guide the downward trend in enterprise lending rates, and contribute significantly to reducing the cost of integrated enterprise financing, helping to stimulate the financing needs of market owners and increase the stability of credit growth. “the chief of the central bank's monetary policy department, sun kuo feng, explained at the launch。
To ensure a downward trend in the interest rate on enterprise loans, it is also important to reduce the cost of the financial institution's liabilities. Liu qiang stated that current policies were working on various fronts, including promoting a steady reduction in the cost of financing enterprises, continuing to leverage the effectiveness of the lpr reforms, effectively maintaining competitive order in deposit markets and stabilizing the cost of bank liabilities。
“stabilizing the competitive order in deposit markets is also important, as the interest rate on deposits is particularly high if deposits compete in an irregular manner. Poorer banks, badly run banks, unable to pull deposits, use high interest rates to lure people into depositing, which will lead to higher interest rates on deposits, other banks will have to keep pace, and the entire bank deposit order or level of interest on deposits will be led by weaker banks, so that the deposit order is important. Moreover, if deposit rates are too high, interest rates on loans will be difficult to lower, and the cost of financing for businesses will be difficult to lower. So we are now working hard to maintain order in the deposit market, stabilize the cost of bank liabilities and promote a steady fall in the cost of integrated financing for enterprises, especially micro-enterprises.” liu qianqian explained specifically。
With regard to further monetary policy space in the future, liu qiang indicated that the current average deposit reserve rate for financial institutions was 8. 4 per cent, a level that was already low, and that the space for further adjustments had become smaller, and there was still room for use in accordance with the performance of the economy and macroregulation。
